JOHANNESBURG (The Business Telegraph):- After 5 months of dormancy, South African Airways could be bailed out by Africa’s most profitable and largest carrier, Ethiopian Airways. The Southern African carrier needs about slightly over a yard of bailout which ET is considering an equity stake as negotiations still linger on and currently are on hold.
SAA has been in the market for $595million, which many private funders have expressed interest. Four key proposals seem promising with ET being one of them including Emirates and the SA government. First Rand Merchant Bank have played an advisory role to the public Enterprise department as the SA state seeks fresh injection of capital from the private sector. This is part of the governments stance to slowly reduce in involvement running commercial business. The funding is required not only to get the carrier back into the sky but to finance the leaning of the operational model to include pay outs to those that will be let go off as the carrier trims workforce to 1,000, ticket refunds and for aircraft leasing companies.
The 80 year old airline has been on a loss streak and has been a drain on state resources that has attracted several bailouts but to little avail.
COVID19 protocols necessitating air border closures has adversely impacted SAA to choke its cashflow generation thereby widening its jaws negatively. The airline has seen a series of rescue package attempts to outright liquidation yet none have crystallized conclusively. The demise of SAA will impact various sectors in an out of South Africa who have for decades depended on the carrier for travel and connectivity.
The Kwacha Arbitrageur