South African Airways acting CEO Musa Zwane
Photo by: Duane Daws
Cash-strapped South African Airways (SAA) has compiled a five-year business turnaround plan, aimed at improving its financial stability, it said on Tuesday.
The national carrier is currently plagued by a weak balance sheet, with projected losses of R3.5-billion for 2016/17– a R2-billion increase on the loss for 2015/16.
“The situation is not only undesirable but unsustainable and this led to the development of the turnaround plan that has been put in place,” SAA said in a statement.
The plan would be anchored on five main pillars to lead to commercial sustainability.
“SAA has been in contact with its lenders to renegotiate the management of its loans, a normal occurrence when loans become due and payable. The airline has government guarantees totalling R19.1-billion. By June 30, R9-billion will be due and payable and only one lender has expressed a desire to have its loan paid back,” said SAA acting CEO Musa Zwane.
However, recent reports have stated that Standard Chartered Bank has declined to renew its loan facilities to SAA, after the airline defaulted on R8.8-billion in loan payments, with the maturity dates already passed.
“We remain optimistic that the company will meet its loan obligations as these become due through negotiations with lenders and other initiatives,” Zwane noted, adding that SAA’s engagements with lenders remained “sensitive and confidential and it would be unwise to share salient details with third parties”.
“The renegotiation of the terms of the loans is ongoing and SAA is optimistic that the airline will continue to operate, and honour its obligations to its customers, suppliers and partners,” Zwane pointed out.
The turnaround plan is now awaiting shareholder approval.