Companies / 10 June 2019, 10:07am / Kabelo Khumalo
JOHANNESBURG – The newly appointed acting chief executive of SAA, Zukisa Ramasia, will have to hit the ground running after the board of the embattled national carrier said it would need an additional R4billion in immediate liquidity to survive the current financial year.
The board on Friday said that the company needed more money to pay its existing debt to stay afloat.
The chairperson of the board’s turnaround strategy committee, Martin Kingston, said they were in ongoing discussions with the government and lenders with respect to putting in place a financial structure appropriate to supporting the long-term sustainability of the company.
He said the airline was in advanced talks with lenders about repaying the R3.5bn bridge loan due next month and extending the R9.2bn long-term loan over a protracted period of time.
“The lenders, if they are going to advance further capital, need to be assured of the fact that their existing exposure, if it is to be restructured, is repaid when it is supposed to be repaid,” Kingston said.
“We are anticipating making a profit in the year 2021/22. We are still on track with that, and absolutely nothing has changed as a consequence of the departure of Mr (Vuyani) Jarana.”
The government, as the only shareholder in the company, has over the years come to SAA’s rescue to the tune of billions of rand. The most recent bailout of R5bn was last October, but the lion’s share of the cash injection went to service its debt.
The company’s total outstanding debt stands at nearly R22bn.
Chris Hattingh, a researcher at the Free Market Foundation, said SAA’s reliance on taxpayer bailouts does not justify any “pride or respect”.
“Pravin Gordhan must not just appoint a new chief executive at SAA with the mandate to turn things around. Because of its very nature, the changing market and consumer trends and behaviours, SAA can never be turned around,” Hattingh said.
Ramasia replaces Jarana, whose last day in office is today.
Ramasia, the general manager for operations at the airline, becomes the ninth person since 2010 - on either a permanent or an interim basis - tasked with turning around the fortunes of SAA.
Jarana in his resignation letter lashed out at the lack of government support in stabilising the entity, stating: “We (SAA) have not been able to obtain any further funding commitment from the government, making it very difficult to focus on the execution of the strategy.”
SAA chairperson Johannes Magwaza said the airline understood that the government’s purse was stretched.
“The shareholder is not only seized with issues at SAA, but with issues at all state-owned entities and must therefore balance his actions and we appreciate that. We might not like and enjoy the speed with which things are happening, but we understand why processes take long,” Magwaza said.
SAA also appointed Adam Voss as the new chief executive of South African Airways Technical and said it was finalising the appointment of a permanent head for Mango.
Sources said erstwhile Mango boss Nico Bezuidenhout was expected to dump EasyJet after nearly three years and rejoin Mango.