SAA set to lose R1.2 billion more than expected: report

Losses at South African Airways are set to widen to R4 billion ($292.86 million) in 2017/18 – up from a previous estimate of R2.8 billion, according to Chief financial officer, Phumeza Nhantsi.

Addressing parliament’s finance committee on Wednesday, Nhantsi said that the higher projected losses for 2017/18 were related to the retirement of five leased narrow-body aircraft, which meant flights had been cancelled and planes grounded, reports Reuters.

Last week, SAA said even with a government injection of R10 billion, the struggling airline will remain under-capitalised with a negative equity position of over R9 billion. Vuyani Jarana, SAA’s CEO, said the airline had outstanding debt of R13.8 billion($1.01 billion) as of this month and that it needed to pay back domestic lenders and U.S. bank Citi R4 billion by March 2018.

“The biggest challenge at SAA is the capital structure as well as the commercial strategy. If we are able to fix that we will be able to get SAA back on its feet,” Jarana said.

Earlier in November, Jarana confirmed that the airline was currently seeking an equity partner that’s able to provide cash and operational savings.

One of SAA’s main strengths is a 55% share of the South African market, which also includes contributions from low-cost carrier Mango and SA Express, Jarana said. A merger of the three airlines would help to secure a strong partner, he said, while also contributing to the cost-cutting plan.

“SA Express is still being run as a separate entity by the government with a separate board,” Jarana said. “It has a big strategic role to play.”

Read: SAA is shopping for an investor to pull it out of trouble

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SAA set to lose R1.2 billion more than expected: report