South African Airways (SAA) is set to receive $263.4 million (KSh 28 billion) in fresh bailouts as part of a restructuring plan that is seeking to save the airline from collapse.
In May, the airline was given 25 days to come up with a formal rescue plan. According to the latest draft seen by Reuters, the airline needs $ 115 million to finance working capital, another $115 million to fund employee layoffs, and an additional $35 million to repay a section of creditors.
The draft plan includes a proposal to reduce the airline’s workforce by 50% to about 2,500 and to reduce its fleet by half to about 20 aircraft in the next few years.
In February this year, the government set aside $945 million 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.
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.
State-owned SAA was placed under business rescue in December last year, with its business administrators requesting an additional 10 billion rand ($777.6 million) in funds toward the rescue plan.
Its fortunes dipped further when the COVID-19 pandemic forced it to halt all commercial passenger flights in March, with the airline threatening to fire all its staff after the government denied it any further bailout. The government argued that resources were being directed toward mitigating the effects of COVID-19 on South African citizens and businesses.
South African Airways is the state-owned flag carrier of South Africa. Its headquarters are in Airways Park at O.R Tambo International Airport. The airline links over 40 local and international destinations across Africa, Asia, Europe, North America, South America, and Oceania. Its base is at Johannesburg International Airport.
The airline has been on the brink of collapse, struggling to make profits since 2011, and majorly relying on government bailouts to survive.