SAA may receive emergency funding from state bank
JOHANNESBURG - South African Airways could receive some of the funding needed to avert its collapse from the Development Bank of Southern Africa, a state-owned financier, two people familiar with the situation said.
While the amount is yet to be decided upon, the national carrier, which is in a local form of bankruptcy protection, needs the money to continue operating. It has already canceled some flights this month after the government missed a deadline to provide 2 billion rand ($136 million).
Spokespeople for South African Airways and DBSA couldn’t immediately comment. They said they may respond later.
Since SAA announced their funding struggles earlier this month, South Africa’s Public Enterprises Ministry said it was talking with the Treasury to raise funds to rescue South African Airways (SAA), following a meeting with business rescue specialists.
The airline is one of several state entities, including power company Eskom, struggling with debt after nearly a decade of mismanagement.
Their woes are seen as the single greatest threat to Africa’s most industrialised economy and have been largely responsible for bringing South Africa’s credit rating to the brink of junk.
Just yesterday, KwaZulu-Natal Premier Sihle Zikalala has added his voice to the ongoing discussion on privatising financially struggling state-owned companies Eskom and the South African Airways (SAA).
Zikalala, who is also the KZN ANC chair, said the state must keep the two state-owned enterprises (SOEs) despite the growing opposition calling to privatise them.
He said these companies are crucial for the development of the country at large. Zikalala was speaking in Port Shepstone on Sunday where the ANC in the province was celebrating 108 years since it was formed in Mangaung in 1912.
Zikalala also frowned at the practice of retrenching workers by struggling SOEs, with the recent round of retrenchments being announced by Telkom. He said workers should not be the first ones to bear the brunt in situations where there is a crisis.
BLOOMBERG / BUSINESS REPORT ONLINE