South African Airways remains under-capitalised

By on November 22, 2017

Despite a government injection of 10 billion rand ($709 million), the South African Airways (SAA)will remain under-capitalised with a negative equity position of over 9 billion rand, a presentation to parliament showed.

The national airline has been relying on government guarantees to keep it solvent and has been cited by major rating agencies as a threat to South Africa’s economy. It received the latest bailout in September.

The airline narrowly missed defaulting on debt repayments of around 5 billion rand ($374 million) owed to domestic lenders thanks to an emergency bailout by the National Treasury, which said a default posed a risked to the entire economy.

SAA has one of Africa’s largest airline fleets but has struggled, relying on around 20 billion rand of guarantees from government to stay afloat.

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