South African Airways (SAA) will receive another funding round of $55 million from the South African Government for business rescue process. The announcement for added funds was made by the Finance Minister of South Africa, Enoch Godongwana during the presentation of the budget in the Parliament, on February 22, 2023.
The minister said that the allocations for these state-owned companies will be accompanied by strict conditions to ensure sustainability, accountability and transparency. If the conditions are not met, the money will not flow. He did not exclude further cash injections for SAA further down the line.
South African Airways entered business rescue in December 2021 and stopped all operations in March 2020. The airline commenced operations again only in September 2021 after an infusion of $500 million, debt restructuring and job-cuts.
In the meantime, the government agreed to sell 51% stake to Takatso Consortium, however the transaction is still pending. The investors, Takatso Consortium had initially indicated that they will not be responsible for the airline’s debt, however it is expected to inject $163 million in the airline once majority ownership is transferred.
While speaking to News24.com, a spokesperson for the Takatso Consortium said: “The partial fulfilment of this obligation is not what Takatso Aviation had expected. We will, therefore, have to assess the impact thereof on progress of the transaction. The unease Takatso Aviation funders have with signing-off on the release of the funds we're mobilising for our R3 billion commitment to SAA, while the outstanding business rescue plan debt subsists, is an issue we have highlighted time and again."
The airline still has to pay the third installment on its debt of $190.9 million by August 2023. Meanwhile, SAA is no longer technically insolvent, and had a net equity value of $55 million at the end of 2022.