South Africa to bail out indebted airline as it seeks buyers

South Africa’s government is talking with potential investors in the state-owned airline in an attempt to ease the continuing burden the company puts on the national budget. “I am pleased to learn that there are conversations involving South African Airways and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles,” Finance Minister Tito Mboweni told lawmakers in Cape Town Wednesday. The government will repay loss-making SAA’s outstanding government-guaranteed debt of 9.2b rand ($629m) over the next three years, the National Treasury said in the medium-term budget policy statement. Lenders are demanding a firm repayment plan as a condition for agreeing to extend more funding, SAA has said. Identifiying an equity partner to invest in SAA has been proposed in the past, though no buyer has officially come forward. However, Ethiopian Airlines Group CEO Tewolde Gebre Mariam said earlier this month his airline would consider taking a stake -- if the South African goverment made the request. SAA has incurred over 28b rand in cumulative losses over the last 13 years and missed the deadline to submit its earnings for the financial year ending March to parliament. While SAA recently received a 5.5b-rand lifeline to extend maturities on outstanding debt, it hasn’t been able to reach an affordable repayment plan with creditors. “SAA is unlikely to ever generate sufficient cash flow to sustain operations in its current configuration,” Mboweni said in a written copy of his speech.<br/>