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South Africa Misses Deadline to Bail Out Its National Carrier

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South Africa Misses Deadline to Bail Out Its National Carrier

  • Carrier needs 2 billion rand to keep operations going
  • SAA struggling to pay its bills despite repeated bailouts
South African Airways Acting Chief Executive Officer Nico Bezuidenhout Demonstrates Airliner Catering Stripping Operation

Photographer: Waldo Swiegers/Bloomberg

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South African Airways said all flights are operating normally as the government looks for ways to provide 2 billion rand ($138 million) in funding for the embattled national carrier.

While there may be “flight schedule amendments” in the future, details of those changes will be announced when finalized, SAA said in an emailed statement on Monday. The airline has been in a local form of bankruptcy protection since last month.

Lenders agreed in December to provide 2 billion rand to enable SAA to continue to operate, while the government committed an equal amount though the National Treasury. However, it has yet to pay the funds. President Cyril Ramaphosa’s government said over the weekend it continues to work toward finding ways to create “a restructured, modern airline.”

South Africa's President Cyril Ramaphosa Interview

Cyril Ramaphosa

Photographer: Waldo Swiegers/Bloomberg

A Sunday deadline for funding was extended after the Department of Public Enterprises pledged to continue trying to persuade the Treasury to come up with the money, the Johannesburg-based Business Day newspaper reported Monday, without citing anyone.

Louise Brugman, a spokeswoman for the business-rescue practitioners, declined to comment.

Read More: South Africa Readies Asset Sales as SAA Faces Funding Crisis

SAA, which last made a profit in 2011 and has received 57 billion rand in bailouts since 1994, has been struggling to pay its bills after the Treasury balked at providing it with more funding. Its finances took a further hit when staff staged a pay strike in November, grounding a number of flights and causing bookings to be canceled.

“We are determined to break with the past patterns of bailouts as these have become a moral hazard,” DPE spokesman Sam Mkokeli said in a statement on Sunday. “We are determined to contribute to the business-rescue process so that we could minimize job losses.”

The carrier has already burned through a loan it got from banks last month, according to people familiar with the matter. Lenders are hesitant to step in again, said the people, who asked not to be identified because the talks are ongoing.

— With assistance by Paul Vecchiatto, and Loni Prinsloo