South African Airways flights at risk without $139 million from government: union

JOHANNESBURG (Reuters) - South African Airways (SAA) could have to suspend some flights and delay salary payments if the government can’t come up with a plan soon to provide the 2 billion rand ($139 million) it promised the airline last month, a trade union official said on Wednesday.

FILE PHOTO: A South African Airways (SAA) Airbus A320-200 aircraft is pictured after landing at Cape Town International Airport in Cape Town, South Africa December 9, 2019. REUTERS/Sumaya Hisham/File Photo

State-owned SAA entered a form of bankruptcy protection last month in an effort to rescue the company and 10,000 related jobs. At the time it was promised 2 billion rand from the government and 2 billion rand from lenders.

But unions briefed by the specialists appointed to turn around the carrier were told on Wednesday that the government had not yet been able to provide its portion of the funds and that the 2 billion rand from lenders had been exhausted, National Transport Movement president Mashudu Raphetha told Reuters.

Unions were told SAA’s business rescue practitioners needed clarity from government on the 2 billion rand of promised funding by the end of Jan. 19, Raphetha said.

Les Matuson and Siviwe Dongwana, the business rescue practitioners, said in a statement: “We remain hopeful that a mechanism can be found to unlock the liquidity constraints.”

“Government continues to indicate its support for the business rescue process and together we are considering various scenarios to keep the entity operational. ... The liquidation of SAA is not one such current scenario,” the statement added.

A public enterprises ministry spokesman was not immediately available for comment.

In a statement on Dec. 20, Matuson and Dongwana said there was a “reasonable prospect” of rescuing SAA.

SAA is one of several state companies mired in financial crisis after nearly a decade of mismanagement and corruption in Africa’s most industrialized economy.

The national carrier’s case is seen as a test of President Cyril Ramaphosa’s resolve to carry out badly-needed reforms.

Reporting by Alexander Winning; Editing by Sandra Maler and Jonathan Oatis