ON THE MONEY
STUART THEOBALD: State may have no choice but to bail SAA out again
‘South African Airways stands out as the most dramatic financial disaster currently in the portfolio of state-owned companies’
South African Airways (SAA) has revealed itself to be the most diabolically run company in the country.
In less than two months, the airline has to pay back R6.8bn worth of debt. It has no cash to settle this and is bleeding more cash at an alarming rate.
It is hoping lenders will roll the debt over into new loans, but Standard Chartered refused in July to extend a R2.2bn loan and others may do the same.
In documents presented to Parliament on Friday, SAA’s own cash-flow projections show that in August it is going to be R936m short of what it needs after using all the facilities available to it. It has rung up a cumulative operating loss of R1.35bn in the financial year to date. The year started only in April. The end-September debt deadlines are already the result of previous extensions by lenders. When Standard Chartered refused to roll over its debt, the government had to step in and make good — as it will have to again should other lenders refuse to extend their loans. To deal with this disastrous position, SAA is planning to get another R13bn capital injection from the state. It does not look like the government, and thus the taxpayer, has much choice. Without the capital injection, SAA will cease operations and probably have its creditors try to liquidate it. In order to get auditors to sign off its last financial statements, the government had to increase a guarantee of the a...
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