SAA needs R7.5bn in working capital from next month

South Africa’s cash-strapped state airline will need a total of R7.5 billion ($540 million) from next month to fund day-to-day operations into 2019, a presentation to a parliamentary committee by the airline showed on Tuesday.

SAA, which has not generated a profit since 2011, survives on state guarantees and is regularly cited by credit ratings agencies as a drain on the government purse.

It has drawn up an austere turnaround plan that includes cutting jobs and routes in effort to turn a profit by 2021 and convince lenders to restore credit lines.

The airline said lenders have refused to lend the company R3.5 billion to plug a liquidity hole from December unless they received additional commitments from the government, the presentation showed.

In addition, the national carrier will need R4 billion ($288 million) from March next year, the presentation showed.

“Currently we don’t have an optimal capital structure and as a result of that we are dependent on debt which is not good… the banks are pushing now for much more better support from the shareholder to put in place for us,” said Deon Fredericks, SAA’s interim chief financial officer.

SAA is expected to make a R5.2 billion loss in the 2019 financial year and another R1.9 billion in 2020 before swinging into profit a year later, the presentation showed.