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Date published 30.10.2017

MOST of the recent additional capital injection to South African Airways from the government, which has generated outrage from opposition MPs and scepticism from economists and industry observers, will be used to settle maturing loans. The airline confirmed last week it had asked the Treasury for recapitalisation to the tune of R13.1-billion over three years.

R10-billion has already been allocated in the current financial year. For the period ending September 31, the airline received R5.2-billion. Of that, R2.2-billion was used to settle its loan with Standard Chartered. R700-million was paid to Citibank in September and R1.2-billion was used towards working capital requirements.

Of the funds remaining, R5.2-billion had been ring-fenced to enable the carrier to meet loan requirements and partially settle domestic lenders. 40 percent of a remaining R4.8-billion would be used as working capital.

The airline said it was aware to the allocation comes at a time when the government faced a number of demands competing for resources. However, it maintained: “This calls for departure from a mundane flight path, work with urgency towards bringing more shareholder value and become more financially sustainable in the shortest time possible”.

SAA is due to present its latest year financial results in November but said the implementation of its turnaround plan had to switch to a higher gear and reassure through results the airline was on course towards financial stability.

Management said it had made significant headway in meeting requirements set out by the government before it would provide more funding, including a new permanent CEO.

“SAA is implementing some major initiatives as part of its remediation to improve financial performance and optimise operational performance. The airline has already announced its network changes and other milestones will be announced as the turnaround plan is implemented,” a statement from the carrier maintained.

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