South African Airways administrators has announced that the money owed to aircraft lessors and some creditors of South African Airways is not covered by a $640 million government bailout.
South Africa’s government allocated the latest cash injection of $640 million for the country’s airways in last month’s mid-term budget, but says it will not put further money into the airline.
Public Enterprises Minister Pravin Gordhan has disclosed that the government was not going put more money into the Airways and its ultimate aim is to rid itself of the Airways burden.
The Airways administrators said that R1.7 billion owed to lessors and R600 million which it owes to creditors from before the airline went into administration nearly a year ago will not be covered.
That could complicate government talks with prospective investors in the national carrier, which has not made a profit since 2011.
The administrators also said the additional debts are “only payable from next year July and will be paid over a three-year period,” so the bailout money only covers “initial commitments”.
The administrators also forecast in June that SAA will lose more than R6 billion over the next three years. Some analysts expect greater losses given the damaging impact on air travel of the global Covid-19 pandemic.
Read also: South African Airways bailout talks stall
They also told lawmakers on Wednesday that R2.8 billion of the bailout monies was earmarked for employee-related payments, R2.7 billion for recapitalising SAA subsidiary Mango Airlines, catering arm Air Chefs and maintenance division SAAT, and R2 billion for working capital.
Another R2.2 billion will repay those who had bought tickets but not yet flown and R0.8 billion would go to creditors who had funded SAA since it went into administration.
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