NEWS ANALYSIS: SAA will need more funding
Recent Treasury bail-out will not cover bankrupt airline’s operating costs until the end of March 2018
The R1.2bn South African Airways (SAA) received from the Treasury for working capital on Friday is only half of what it needs until end-March because it is not generating sufficient cash to cover its costs. In addition to the R1.2bn for working capital, R1.8bn was transferred to SAA so it could repay its loan to Citibank which expired on Saturday and which the bank decided not to extend. SAA’s continuing need for working capital means further funds are likely to be allocated to the bankrupt airline when Finance Minister Malusi Gigaba tables his medium-term budget policy statement in Parliament on October 25. In addition, the Treasury has to regularise the R2.2bn payment made to SAA in June so it could repay the loan from Standard Chartered Bank. In a recent reply to a parliamentary question, the minister disclosed that SAA’s working capital requirements had been calculated at R2.5bn until the end of March. SAA, which has projected negative monthly cash flow of hundreds of millions o...
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