South Africa considers resurrecting flag carrier with state funds

The government of South Africa’s President Cyril Ramaphosa is considering resurrecting the country’s flag carrier with state funds. The proposal would reverse previous pledges to withhold more bailouts from South African Airways that has been pushed close to liquidation by the coronavirus pandemic. The government would inject R4.6b ($264m) to create a new state airline out of SAA, which was placed into a form of bankruptcy protection last year. The draft proposal by administrators was published by South Africa’s biggest opposition party on Monday. The ministry responsible for overseeing state-owned companies said the government “has not discussed the plan yet and no decisions have been taken on some of the proposals it contains”. SAA has grounded commercial flights since South Africa began a lockdown in late March. This has added to a decade of losses that has brought it to near-collapse and tested the limits of Ramaphosa’s willingness to devote stretched public finances to rescue beleaguered state companies. SAA administrators said in the draft plan that state funds were needed on top of about R16bn that the government has already approved to pay off creditors of the airline. The resurrected SAA would sharply cut jobs and aircraft but would be projected to post losses of more than R19b in the next three years. “If this draft business rescue plan is approved in its current form, SAA will continue to be a fiscal black hole for years to come,” the main opposition Democratic Alliance said.<br/>