South African Airways gets $600-mn lifeline from govt; rival Comair demands level playing field
04 October 2012
South Africa's flag carrier and largest airline South African Airways (SAA) has secured a 5- billion rand ($600 million) guarantee from the treasury to strengthen its balance sheet and buy new aircraft.
''The treasury granted SAA a 5-billion rand guarantee for a period of two years from 1 September,'' the South African department of public enterprises said.
"The guarantee will enable SAA to borrow from the financial markets, thus ensuring that the airline continues to operate as a going concern."
The support provided is conditional upon SAA working with the treasury and the department of public enterprises to work out a turnaround strategy, including the development of a financing programme for the airline's purchase of new aircraft for its long-haul routes and regional networks.
SAA chairman Vusyisile Kona, who took over the company last week, said that the new business plans will be drawn up in consultation with the airline's strategic partners South African Express and SA Airlink.
"Consolidation is the trend globally,'' he said. "If consolidation takes place or does not will be determined by the business plan," Kona further stated.