Government misses SAA bailout deadline

The South African government said it’s working on solutions for the national airline after failing to pay 2 billion rand ($138 million) in funding by a Sunday deadline.

President Cyril Ramaphosa’s government said it continues to work with South African Airways’ lenders and business rescue practitioners, “with the primary goal of bringing out of this process a restructured, modern airline.”

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. The airline has been in a local form of bankruptcy protection since last month.

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,” Department of Public Enterprises 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.

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Government misses SAA bailout deadline