South Africa raises $1.1 Billion bailout for ailing Airline

South Africa has almost doubled its funding for the national airline to 16.4 billion rand ($1.1 billion), cash which will go towards supporting a restructuring plan for the almost insolvent carrier.

The bailout will be used to service and pay debt previously guaranteed by the state over the “medium term,” according to the country’s Finance Minister, Tito Mboweni.

This amount compares with 9.2 billion rand earmarked for South African Airways in October.

SAA has been a drain on the National Treasury for several years racking up losses of more than R32 billion over the past decade.

Late last year, the government placed the airline on a local form of bankruptcy protection, and administrators have set about reducing costs by closing routes and considering asset sale.
However, the Finance Minister has often stated his reluctance to support SAA while faced with bigger problems such as the $30 billion of debt owed by state-owned power utility, Eskom Holdings.

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In addition to Treasury funds, SAA was given access to R3.5 billion from the state-owned Development Bank of Southern Africa, last month.

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