South African Airways Receives Emergency Bail-Out from Government
South African Airways announced it received an emergency R550 million ($63.1 million) loan from the South African government in order to cover fuel costs and to keep the airline from being grounded last week. The loan, signed and enabled by finance minister Pravin Gordham and public enterprises minister Malusi Gigaba, has to be repaid over the next three months.
A spokesman for Minister Gigaba said that there was nothing out of the ordinary about the loan, adding that airlines across the globe have experienced financial challenges. The airline’s fuel contracts are under review, and Gigaba said that he is unhappy with the prices that the airline is receiving.
The loan follows other crises that the impacted the airline last year. In March of 2012, SAA reported loses of R1.25 billion ($143.3 million), and several board members resigned during the last quarter of the year. On October 8, 2012, a formal warning was issued to Gigaba, advising that the airline could be grounded by the end of the year if steps and interventions were not taken immediately.
Last week, LOT Polish Airlines announced a loan from the Polish government as well as a significant restructuring.