Cape Town – State-owned airline South African Airways (SAA) needs to borrow a further R535m against its government guarantee to cover operating costs.
The airline received a R400m loan in January.
A source close to the airline who wished to remain anonymous told Beeld about the latest amount, and said the airline needs the funds for costs including fuel and salaries.
SAA spokesperson Tlali Tlali confirmed to Beeld that the SAA needs more cash, but did not want to confirm the amount of R535m, saying the airline is still talking to financial institutions.
He said the airline would be borrowing the money from these institutions, using the R5bn government guarantee as security.
“This R5bn was divided into two parts of which one part, R1.5bn, is only available till March 31 2013. We’ve borrowed the R400m against this amount, and now we’re pursuing another amount.
"This new amount is less than the remaining balance of R1.1bn.”
Government gave SAA the guarantee in October last year, after the carrier made a loss of R1.3bn for the year to March 31 2012 and amid growing concern about its continued viability.
In line with the global industry trend, the airline is struggling under the burden of high oil prices and lower demand. SAA also has a weakened balance sheet after having its capital wiped out over the past few years.
SAA’s money troubles started in 2004, when the airline made a hedging loss of R6bn. This hedge was taken out to protect the airline against rising fuel costs, only for oil prices to drop massively in the period.
Since 1992 the SAA has lost a total of about R17bn.
Natasha Michael, DA spokesperson on public enterprises, said of greatest concern is the extent of SAA’s money troubles and the lack of transparency around the issue.
“Why does the airline need cash every month? Initially we were told SAA needs the guarantee to assist in turning it around and recapitalising the airline. Now it appears the money is needed to fund operations.”
Tlali told Beeld it was always the intention to use a part of the guarantee to borrow money for operational costs.
“There is a plan, and per this plan some cash is needed to tide the airline over till things are better. It must also be made clear the SAA did not get any money from government and will need to repay these loans to the banks.
"Government is only the guarantor.”
Follow James-Brent Styan on Twitter by @jamesstyan.
Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.