Cash-strapped state carrier South African Airways (SAA) will receive R3.5 billion in emergency funding from government-owned Development Bank of Southern Africa, the airline’s business rescue practitioners said.
SAA is fighting for survival after it entered a form of bankruptcy protection in December and cancelled flights due to cash shortages.
“We can confirm the Development Bank of Southern Africa committed R3.5 billion in funding to the SAA Practitioners, with an immediate drawdown of R2 billion,” the team overseeing SAA’s bankruptcy protected restructuring said.
“Funding for the restructuring phase after the business plan is adopted is being considered by potential funders,” the practitioners said.
SAA has not made a profit since 2011, surviving on more than R20 billion in bailouts over the last three years. That put South Africa’s credit rating and investor confidence under pressure.
The new year saw SAA anxiously awaiting R2 billion in emergency cash promised by government when the airline entered bankruptcy protection.
Finance Minister Tito Mboweni stalled, insisting the bailout be done in a way that avoids increasing the country’s budget deficit.
The wrangling hurt President Cyril Ramaphosa’s mission to revive flagging economic growth and restore foreign investment.
The DBSA said it would release a statement outlining details of the funding. SAA did not respond to phone calls and text messages from Reuters requesting comment.