South Africa misses deadline to bail out its national carrier

Johannesburg

THE South African government said it is working on solutions for the national airline after failing to pay two billion rand (S$185 million) in funding by a Sunday deadline.

President Cyril Ramaphosa's government said it continues to work with the lenders and business-rescue practitioners of South African Airways' (SAA) , "with the primary goal of bringing out of this process a restructured, modern airline".

Lenders agreed last month to provide two billion rand to enable SAA to continue to operate, and the government committed an equal amount through the National Treasury. However, it has yet to pay the funds. The airline has been in a local form of bankruptcy protection since last month.

The deadline for funding was extended after the Department of Public Enterprises (DPE) pledged to continue trying to persuade the Treasury to come up with the funding, the Johannesburg-based Business Day newspaper reported on Monday, without citing anyone.

Louise Brugman, a spokesman for the business-rescue practitioners, declined to comment.

SAA, which last made a profit in 2011 and has received 57 billion rand in bailouts since 1994, has been struggling to pay its bills after the Treasury baulked at providing it with more funding. Its finances took a further hit when staff staged a pay strike in November, grounding a number of flights and causing bookings to be cancelled.

"We are determined to break with the past patterns of bailouts as these have become a moral hazard," DPE spokesman Sam Mkokeli said in a statement on Sunday.

"We are determined to contribute to the business-rescue process so that we can minimise job losses."

The carrier has already burned through a loan it got from banks last month, according to people familiar with the matter. Lenders are hesitant to step in again, said the people, who asked not to be identified because the talks are ongoing. BLOOMBERG