South African Airways need $265m to Survive – CEO
South African Airways’ (SAA) newly-appointed interim CEO, Zukisa Ramasia has said it needs 4 billion rand ($265 million) from the government to survive the current financial year. She also says the company needs to be able to renegotiate loan terms with banks.
Ramasia who became interim CEO after Vuyani Jarana resigned unexpectedly on Sunday after less than two years in the job, explained that his turnaround strategy for the unprofitable airline was being undermined by bureaucracy and lack of state funding.
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The ailing SAA has not made profits since 2011 and Jarana launched a five-year turnaround plan that includes slashing costs and cancelling unprofitable routes, requiring around 21.7 billion rand ($1.5 billion) in cash injections from the government.
“We are currently operating at a loss and that is the background to the request we’ve made for 4 billion rand of support for the current financial year,” board member Martin Kingston told a news briefing.
“We are in discussion with lenders about repaying the 3.5 billion rand (due in July) and extending the 9.2 billion rand (of other debt) over a protracted period of time.”
“Repaying the 3.5 billion rand opens the door for us to access additional liquidity for the current financial year,” said Kingston.
Jarana’s departure from SAA followed the resignation of power utility Eskom’s chief executive Phakamani Hadebe last month, who had also been trying to stabilise his highly indebted company, highlighting the mammoth task South African President Cyril Ramaphosa faces to fulfil his promise to reform state firms and wean them off government support.
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