As part its debt resettlement plan, South African Airways receives a cash injection of ZAR 1 billion to help emerge out of bankruptcy for the carrier which is no longer making operational losses.

In a key move as part of its journey towards solvency, South African government has okayed the transfer of ZAR 1 billion to the national carrier South African Airways. South African Finance Minister Enoch Godongwana announced the allocation to settle a portion of the outstanding obligations on the implementation of SAA’s 2020 Business Rescue Plan.

In a press statement, the flag carrier of South Africa has welcomed the transfer of funds and says that as noted by Minister Godongwana, the allocation is part of the government’s commitment to the business rescue process that SAA exited in April 2021. It will be used to cover outstanding liabilities, specifically those relating to the final dividend payment to creditors and the refund of legacy unflown tickets to affected passengers, which date back to the period when SAA was placed in business rescue in December 2019.

“SAA’s operations have progressed positively since the airline emerged from business rescue, and as reported to Parliament earlier this month, SAA is no longer technically insolvent, a milestone which we reached a year earlier than projected,” says John Lamola, SAA’s Executive Chairman and Chief Executive Officer.

“SAA has reached a point where we cover our operating costs. It must be emphasised that the allocation announced relates only to historical debt. These funds are not meant to bolster the business plan we are currently executing,” says Fikile Mhlontlo, Chief Financial Officer.

The ZAR 1bn allocation is part of original ZAR 3.5 bn that was needed for SAA to settle all debt that the Business Rescue practitioners had ring-fenced into a Receivership. The airline says that due to the financial performance of SAA and the innovations of its management team, the total balance expected from National Treasury has been reduced to ZAR 2.586 bn. The airline will continue to negotiate with National Treasury for the balance of the funds and cooperate with all the conditions that may accompany the flow of these funds, says the statement.