South African Airways (SAA) is set to receive $272 million bailout from the government and banks. This comes as it plans to transition into the business rescue phase.
Being placed under business rescue means the airline will be under the temporary supervision of a specialist practitioner. This is meant to rehabilitate it so as to improve its chance of survival.
According to South Africa’s Minister of Public Enterprises, Pravin Gordhan, SAA will receive 2 billion rand ($136 million) from existing lenders ahead of the business rescue. It will then receive another 2 billion rand at a later date through the country’s national treasury.
The move is aimed at ensuring there will be no further unplanned stoppages or cancellations of flights.
This is the optimal mechanism to restore confidence in SAA and to safeguard the good assets if SAA and help restructure and reposition the entity into one that is stronger, more sustainable and able to grow to attract and equity partnerSouth Africa’s Minister of Public Enterprises, Pravin Gordhan
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 since a crippling strike last month left it without enough money to pay salaries on time.