South Africa pours US$1.1b into insolvent South Africa Airways as bailout
SOUTH AFRICA has doubled the level of funding for its national airline to ZAR16
SOUTH AFRICA has doubled the level of funding for its national airline to ZAR16.4 billion (US$1.1 billion). The cash raised will be used to support a restructuring plan for the carrier that is technically insolvent.
The bailout will be used to service and pay debt previously guaranteed by the state over the 'medium term', Finance Minister Tito Mboweni said in his budget speech in Cape Town. The amount compares with ZAR9.2 billion earmarked for South African Airways in October.
'It is the very sincere hope of many that this intervention will lead to a sustainable airline that is not a burden to the fiscus,' Mr Mboweni was quoted as saying in a report by Bloomberg.
S has been a drain on the National Treasury for several years and has racked up losses of ZAR32 billion over the past decade. The government placed the airline in a local form of bankruptcy protection late last year, and administrators have set about reducing costs by closing routes and considering asset sales.
In addition to cash from the Treasury, S was last month given access to ZAR3.5 billion from the state-owned Development Bank of Southern Africa.