South African Airways rescue stalls as banks say they lack funds
THE expected rescue of South African Airways (S) has been stalled because government attempts to raise ZAR5
THE expected rescue of South African Airways (S) has been stalled because government attempts to raise ZAR5.3 billion (US$307 million) from commercial banks has failed, Bloomberg News reports.
A person familiar with the situation said the administrators of the state-owned airline can't hand over the business to management because it is insolvent.
The banks were approached by representatives of the Department of Public Enterprises and the National Treasury, the person said, asking not to be identified as a public statement has not been made.
S hasn't made money since 2011 and has survived on government bailouts - a situation Finance Minister Tito Mboweni said is unsustainable. He has undertaken to try and 'mobilise' ZAR10.3 billion the airline needs to keep flying between private equity, pension funds or strategic partners.'
The Department of Public Enterprises declined to comment and the Treasury didn't immediately respond to a query.
B4SA, a grouping of the country's biggest business organisations, said that with the economy in crisis banks have other priorities and shouldn't fund the carrier.
'We don't have the money as a country,' said Martin Kingston, chairman of the steering committee for the group and a former S board member. 'The last thing on our list is for state-enterprise that is not essential to receive support.'