SAA could get emergency funding from the state Development Bank

South African Airways could receive some of the funding needed to avert its collapse from the state-owned Development Bank of Southern Africa, according to two people familiar with the situation.

While the amount is yet to be decided upon and hasn’t been signed off, the national carrier needs the money to continue operating. SAA has already canceled some flights this month after the government missed a deadline to provide 2 billion rand ($136 million) as part of the terms of its bankruptcy protection.

Spokespeople for South African Airways and DBSA couldn’t immediately comment. They said they may respond later.

SAA has been loss-making since 2011 and has survived on government bailouts and state-backed guarantees on external loans. Its business-rescue experts have until the end of next month to provide a turnaround plan, but the National Treasury has been reluctant to commit further state funds as part of that strategy.

The DBSA’s mandate is to invest in infrastructure projects in South Africa and the rest of the continent that will help with economic development. The financier can back state-owned enterprises as part of its remit, according to the company’s website.

“In our view it would be no better than taking money straight out of the national revenue fund,” said Alf Lees, a lawmaker for the opposition Democratic Alliance. “The DBSA is a wholly state-owned entity.”

At stake is an airline with more than 5,000 employees, as well as thousands more at suppliers and associated companies, in a country with an unemployment rate of 29%. SAA also flies routes to 21 destinations around Africa and cities further afield, including New York and London.


Read: SAA to suck up another R8 billion for ‘restructuring’

Latest news

Partner Content

Show comments

Follow us

Recommended

SAA could get emergency funding from the state Development Bank