South African Airways has announced that it is waiting for the government to decide if it will give the national carrier the badly-needed financial help it needs to keep itself afloat.
"The airline can't finalize its annual financial statements within the prescribed time until the status of the current concern is confirmed," SAA disclosed in a document submitted to legislators on Monday and circulated by the Democratic Alliance's main opposition.
For the flag-carrier to do this, it would require extra guarantees of equity or loan that the government has not committed to providing yet, SAA said.
SAA last made a profit in 2011, and it has failed to make successive plans to turn it around. Although Minister of Public Enterprises Pravin Gordhan said that the airline is going to undergo a "complete transformation" to ensure its financial and operating stability, the actual plan of Finance Minister Tito Mboweni is to shut down the airline.
Mounting debt
Bain Consulting's preliminary analysis in 2018 found out that SAA will need to settle its mounting debts between 35 billion rands ($2.4 billion) and 48 billion rands if it is liquidated, while only 5 billion rand to 6 billion rands from the disposal of its properties could be realized.
Before the airline is closed down, the National Treasury will have to settle 15.3 billion rands in bank debt and creditor guarantees to avoid possible cross-defaults on other loans backed by the Treasury, it said.
In October, the government said it would repay the outstanding 9.2 billion rands ($629 million) government-guaranteed debt of SAA, support that Mboweni said the country couldn't afford and had to end.
More capital needed
But SAA said it needed additional working capital to continue flying, including a 2 billion rand lending facility to enable it to pay its November salaries and other lenders- and that matter remained unresolved as of November 25.
The airline also revealed that its net loss grew from 5.3 billion rands a year earlier to 5.4 billion rand a year by March 2018, as revenue sank by 4.6 percent. These results were also delayed because of uncertainty as to whether it could continue its operations.
A corporate plan revised in February projected that SAA will shed 5.1 billion rands in the year through March and 1.9 billion in the current fiscal year before returning to gain in fiscal 2021.
Since then, SAA's finances have taken a huge blow, made worse by a a week-long strike by employees that forced the cancellation of a number of flights.
