CEO of South African Airways, Vuyani Jarana, says the national carrier has managed to secure another R5 billion cash injection from government to help meet urgent financial obligations.
The promise of more money from government comes after Jarana told parliament in April that the airline was in desperate need of a cash injection to stay afloat.
“Government has committed to inject another R5 billion into SAA. Part of that R5 billion we will repay some of the creditors, suppliers, then the balance will support us for working capital until around October/November,” Jarana told Reuters in an interview.
Normal budgetary process
The Treasury said it would follow its normal budgetary process, which entails seeking cabinet approval.
“The outcome of this process is expected to be finalised in time for the 2018 MTBPS (Medium Term Budget Policy Statement),” the Treasury said.
Jarana said that while waiting for the funds, the company would negotiate for some breathing space with lenders.
“If Treasury needs a certain period of time to do this, let’s say up to September, between now and then, we are negotiating with lenders to give us a bridging facility on the back of that commitment,” he said.
Job cuts inevitable
Jarana noted that the airline was looking at several measures to cut costs and reducing the workforce of approximately 10 000 people was inevitable.
“Whether it’s pilots, cabin crew, administration, we are going to rationalise the workforce. It’s an unavoidable thing. We have been talking to trade unions about how we work together,” Jarana said.
“The first priority for me is job preservation, how do you find alternative jobs for people as a starting point before you go into the hard issues of retrenchments.”
Jarana said the company hopes to break even in three years’ time and “there onwards, everything else equal, it will be able to start paying for its own operations in terms of positive cash flows.”