CAPE TOWN - Deputy Finance Minister Gungubele told Parliament’s Standing Committee on Appropriations that government had considered the effect of disbanding embattled state-owned enterprise, SAA, reports EWN. 

This comes after the airline’s balance sheets remain weak, this despite government’s R10 billion cash injection last year. On Tuesday, SAA chief executive Vuyani Jarana announced that the airline needs a new capital injection “now” to stay afloat and was in discussions with banks and the National Treasury for “an open credit line”. 

SAA, which has not generated a profit since 2011, is regularly cited by ratings agencies as a drain on the government purse and has already received state guarantees totaling nearly R20 billion.

“We do need access to capital to sustain the operations and we are having discussions with Treasury, as well as the banks around how we have an open credit line,” Vuyani Jarana, the chief executive, told parliament.

Jarana told the Parliament’s Standing Committee on Public Accounts (Scopa) that SAA needed a capital injection of at least R5bn worth of new capital this year to stay afloat and to continue its operations.

He said SAA’s debt was burdensome because it could not pay the principal amounts owed, adding that the airline still needed to service its debt and pay for its operational costs.

In the latest SAA news, Gungubele reportedly said that it could cost about R60 billion to shut down SAA. 

Notably, this is triple the amount that the airline needs to stay afloat. 

Gungubele added that SAA already has to pay  R9 billion in debt, due in March 2019. Despite this debt, SAA needs more money, approximately R12 billion, said the Deputy Minister. 

SAA and Treasury are reportedly in talks with banks, discussing an open line of credit.

The Deputy Minister said that SAA will have a trying chance of surviving by 2021, should the carrier receive R20 billion. 

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