South African Airways is considering appointing an independent board to run the debt-ridden airline. Reuters quoted Public Enterprises Minister Pravin Gordhan who revealed plans to run the airline like the state-owned telecoms firm Telkom.
Gordhan says that the restructured airline will incorporate professional aviation managers, strategic partners, and simplified salary structures. He added that the government is keen to learn from the Telkom management model where the South African government holds 37 percent of the issued shares with state-owned fund manager Public Investment Corp. owning around 15%.
SAA creditors approved a bailout plan that involves scaling down the fleet, cutting off thousands of jobs, and a $599.6 million (10 billion rands) capital injection from the government. The plan could see the workforce trimmed by almost 80 percent.
Gordhan said that the government is still in the process of securing the $599.6 million required for the bailout plan.
READ ALSO: South African Airways to Get $263.4 Million State Bailout
Huge government bailouts
SAA has been surviving on government bailouts. The airline last recorded a profit in 2011. SAA financial distress culminated in the airline being placed in administration in December 2019.
SAA has received more than $1.2 billion in bailouts in the last three years, stretching public finances at a time of weak economic growth. Reuters says that the finance and public ministries are committed to financing the 10 billion rands for the current bailout.
This is on top of $945 million set aside in February this year to repay SAA’s guaranteed debt and to cover debt-servicing costs. A short-term $115 million loan from banks is due to be paid in July alongside a $201 million finance package from the Development Bank of Southern Africa.
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