SAA needs R21.7-billion to become profitable again, CEO Vuyani Jarana has told Business Day. This money will have to be raised over the next three years if SAA is to be turned around, and will come in the form of a Treasury bailout as well as loans from banks.
It was previously reported that SAA will need a R5-billion "bailout" from Treasury, but this is actually a "bridging loan" from banks, backed by Treasury, while SAA waits for the bigger bailout, to be finalised by the October budget, Business Day reported.
Jarana reportedly said the R21.7-billion would partly come as a capital injection from Treasury, and partly from debt raised from lenders and guaranteed by government. The size of the capital injection from Treasury is under consideration by a committee chaired by deputy finance minister Mondli Gungubele, Business Day reported.
Treasury reportedly said it supported SAA's turnaround plan.
The Treasury said on Tuesday it supported SAA's turnaround strategy. "Funding of the turnaround strategy will require an acceptable mixture of debt and equity, and this matter is being finalised. National Treasury will follow the normal budgetary process, which will entail seeking Cabinet approval.
"The outcome of this process is expected to be finalised in time for the 2018 [medium-term budget policy statement]," the Treasury reportedly said.
In April, Parliament's Standing Committee on Public Accounts (Scopa) was told that the airline needed another R4.8-billion bailout immediately, following a R10-billion bailout it reportedly received in December last year, according to Fin24.
It is this bailout that now appears to have been a bridging loan which forms part of the broader amount that SAA needs to procure. The airline aims to break even by 2021.
At the time, MPs were told that the money was needed because SAA has no credit line, and has a gap between revenue and expenses. Jarana reportedly told MPs at the time that of the R10-billion given to SAA in December, R7.6-billion went to paying lenders and R2.4-billion was supporting working capital needs. Most aircraft used by SAA are leased, and all domestic routes were making a loss even though the planes were full, he reportedly said.
The cash crisis at SAA is so severe that the deputy finance minister, Treasury and SAA are holding weekly meetings, he reportedly said.
Meanwhile, SAA's turnaround plan was reportedly due to be presented to Parliament on Tuesday but the committee opted to meet behind closed doors. The presentation was reportedly deferred after a dispute about whether or not it should be open to the media.
According to Eyewitness News (EWN), opposition parties were outraged by the decision to keep the meeting closed, and said they were not consulted about it. The DA reportedly said it wanted answers about who decided the meeting should be closed.
Parliamentary rules reportedly allow for meetings to be kept a secret when something could be prejudicial to someone, or is protected by Parliamentary privilege, or is confidential in legislation.