NEWS

SAA Needs Even More Money To Stay Afloat

The R3bn bailout from Treasury will not be enough to save the airline.

02/10/2017 07:27 SAST | Updated 02/10/2017 07:50 SAST
Siphiwe Sibeko / Reuters

The R3-billion bailout controversially received by SAA from National Treasury will not be enough to cover the airline's costs, and it will need more funding to survive, Business Day reported on Monday.

Fin24 previously reported that the R3-billion bailout will place significant pressure on the country's credit rating as well as increase the budget deficit, which currently sits at R141-billion.

READ: Treasury Approves SAA Bailout Using National Revenue Fund

According to Business Day, it is expected that Finance Minister Malusi Gigaba will announce the transfer of more money to the failing airline during his medium-term budget in October.

SAA received R1.2-billion from Treasury for working capital on Friday, but this is reportedly only half of what it will need until the end of March, as it does not generate enough cash to cover its costs.

READ: SAA Bailout: 'We're Shooting Ourselves In The Foot Says Mike Schussler

Gigaba reportedly said that SAA's working capital needs were R2.5-billion until the end of March. This was revealed in a reply to a parliamentary question.

Additionally, Treasury gave SAA R1.8-billion so that it could pay back a loan from Citibank that reportedly expired on Saturday. But a total of R6.8-billion in loans expired on Saturday, although Treasury reportedly was able to get most of them rolled over.