SAA finally gets much-needed $638-million bailout

The government on Wednesday announced the release of 10.5 billion rand ($638 million) needed to fund a plan to rescue struggling, state-owned South African Airways.

The cash-strapped flag carrier was placed under a state-approved administration in December following years of mismanagement and rising debt.

In a mini budget statement on Wednesday, Finance Minister Tito Mboweni said 10.5 billion rand “is allocated to SAA to implement its business rescue plan”.

The bailout is funded through cuts in spending elsewhere in other public entities and conditional grants.

The latest allocation expected to save the limping airline, is in addition to 16.4 billion rand doled out in February this year to settle guaranteed debt and interest.

Administrators axed most domestic and some international routes in February to save cash — even before coronavirus grounded airlines globally — as they drafted a massive restructuring plan to create a leaner, competitive airline.

The rescue plan will see the airline shrink dramatically, emerging with a fleet of just six aircraft out of the 44 it had last year. Only a fifth of the almost 5,000 employees would remain.

The aim is then to grow it back to 26 planes by the end of 2021 and re-hire 1,000 furloughed staff