January 28, 2020 / 2:42 PM / 23 days ago

UPDATE 1-South African Airways gets 3.5 bln rand emergency funding from state-owned bank

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JOHANNESBURG, Jan 28 (Reuters) - Cash-strapped state carrier South African Airways (SAA) will receive 3.5 billion rand ($244 million) of emergency funding from the government-owned Development Bank of Southern Africa, the airline’s business rescue practitioners said on Tuesday.

SAA is fighting for its survival after it entered a form of bankruptcy protection in December and cancelled some flights because of cash shortages.

“We can confirm that the Development Bank of Southern Africa has committed 3.5 billion rand in funding to the SAA Practitioners, with an immediate draw-down of 2 billion rand,” the team overseeing SAA’s bankruptcy-protected restructuring said.

“Funding for the restructuring phase after the business plan is adopted is being considered by potential funders,” the practitioners said.

SAA has not made a profit since 2011, surviving instead on more than 20 billion rand in bailouts over the last three years. That has put the country’s credit rating and investor confidence under increasing pressure.

The new year saw SAA anxiously awaiting 2 billion rand of emergency cash promised to it by government when the airline entered bankruptcy protection.

But Finance Minister Tito Mboweni stalled, insisting the bailout be done in a way that avoids increasing the country’s budget deficit.

The wrangling has hurt President Cyril Ramaphosa’s mission to revive flagging economic growth and restore foreign investment.

The DBSA said it would release a statement outlining details of the funding. SAA did not respond to phone calls and text messages from Reuters requesting comment.

$1 = 14.3325 rand Reporting by Mfuneko Toyana; Editing by Alison Williams and Jan Harvey

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