SAA may receive emergency funding from state bank

(iStock)
(iStock)

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 have 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 R2bn.

Spokespeople for South African Airways and DBSA couldn't immediately comment. They said they may respond later.

Treasury and business rescue practitioners were also unable to comment on the matter, when asked by Fin24. 

Earlier this month, following speculation that the airline was going to fold as it faced a liquidity crisis, the Department of Public Enterprises issued a statement assuring the public of its commitment to saving the airline.

"We are determined to contribute to the Business Rescue process so that we could minimise job losses and give birth to a rejuvenated SAA that all South Africans could be proud of. Collective effort is needed to make SAA as a premier African airline and Star Alliance member," the Department of Public Enterprises (DPE) said in a statement on Sunday January 19, 2020.

However, government has been steadfast in its new strategy to avoid past patterns of bailouts which had become a "moral hazard" and said the business rescue process should reposition the airline in a way that does not continue to burden the fiscus and taxpayers.

Additional reporting by Fin24.

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