The South African government has refused South African Airways (SAA) an additional loan of approximately €500 million.
South African Airways has been denied any additional loan by the South African government in order to recover from the current crisis.
“We are currently assessing the impact of this development on the business-rescue process and will communicate any decisions to be made,” the airline’s administrators (who were put in charge in December 2019) said in a letter to Bloomberg.
The airline is in “Business Rescue” since December 2019 as the airline faces losses since 2012. Administrators had cut routes and started consultations with unions for a possible loss of 4,700 jobs.
The grounding of SAA due to the COVID-19 crisis accelerated its needs, and have dug further into the treasury of the airline.
“All options are now blocked to any form of real continuation of the airline,” said Peter Attard Montalto, head of capital markets research at Intellidex, to Bloomberg. “Basically the only option now is liquidation.”
“We are of the firm conviction that South Africa needs a viable and sustainable set of airlines,” the Department of Public Enterprises, lead by Pravin Gordhan, said in a statement late Tuesday. “We must urgently determine the operating and business model for a rescued airline, with a sustainable financial model.”