SAA’s R10.5bn bailout does not cover aircraft lessors, other creditors

Money owed to aircraft lessors and some creditors of South African Airways is not covered by a R10.5 billion government bailout, SAA’s administrators said.

South Africa’s government allocated the latest cash injection for SAA in last month’s mid-term budget, but says it will not put further money into the airline.

Read: This is where SAA got its R10.5bn from

SAA’s administrators told Reuters on Thursday that R1.7 billion owed to lessors and R600 million which it owes to creditors from before the airline went into administration nearly a year ago would not be covered.

That could complicate government talks with prospective investors in SAA, which has not made a profit since 2011.

They said the additional debts are “only payable from next year July and will be paid over a three-year period,” so the bailout money only covers “initial commitments”.

The administrators forecast in June that SAA would lose more than R6 billion over the next three years. Some analysts expect greater losses given the damaging impact on air travel of the Covid-19 pandemic.

They told lawmakers on Wednesday that R2.8 billion of the bailout money was earmarked for employee-related payments, R2.7 billion for recapitalising SAA subsidiary Mango Airlines, catering arm Air Chefs and maintenance division SAAT, and R2 billion for working capital.

Another R2.2 billion would repay those who had bought tickets but not yet flown and R0.8 billion would go to creditors who had funded SAA since it went into administration.

A spokesman for the ministry responsible for SAA was not immediately able to comment.

Public Enterprises Minister Pravin Gordhan told lawmakers on Wednesday that the government was not going put more money into SAA and its “ultimate aim is to remove the burden … from our shoulders”.