South African Airways Bailout: Flag carrier secures $256.8M loan to stay aloft until March

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02:15

South African Airways has secured yet another loan to keep its planes in the air. This one is for 257 million US dollars to get the struggling airline through the end of its financial year in March. The loss-making flag carrier is in the middle of a 3-year plan to fix its cash flow problems. CGTN's Angelo Coppola has the story, from Johannesburg.

While the banks won't confirm any loans citing banking regulations, there is a misconception that the South African taxpayer is going to land up footing the bill for any further bailouts for the national flag carrier.

LEON LOUW EXECUTIVE DIRECTOR, FREE MARKET FOUNDATION "This is treasury backed and guaranteed, in other words, backed and guaranteed. Some people would say by taxpayers, but I make the point that they don't go and collect anything more from taxpayers. What they do is they divert the money from the poor. From social grants, from housing, schooling and education."

The South Africa-based banks have to look at the long term picture and ensure that shareholders get investment returns and that any perceived risks are properly identified, managed and priced into any loans they provide to SAA.

LEON LOUW EXECUTIVE DIRECTOR, FREE MARKET FOUNDATION "So the banks just lend any amount of money to state owned entities, so long as they think that treasury is solvent. When they stop bailing out state owned enterprises, Denel, SAA, Eskom and so on, then you must realize they've decided actually the treasury is insolvent. That's very serious."

While SAA management has a turnaround plan in place and is working to milestones, their time is running out. Many analysts and commentators have called for the airline to be placed under business rescue.

LEON LOUW EXECUTIVE DIRECTOR, FREE MARKET FOUNDATION "So what you want to do is negotiate your way out of that debt, the best way you can, out of the lease agreements on planes, sell off if you can, SAA Technical, which in itself is rife with corruption and incompetence and inefficiency. And theft, even to the point of stolen airplane engines. I mean we are not talking small stuff here."

The airline itself has been tight-lipped about whether it has the bank loans or not, only saying that it won't comment until the matter has been resolved or settled.

ANGELO COPPOLA JOHANNESBURG, S. AFRICA "As the airline limps from month to month, there is still no clarity on whether it has a bailout from those South African banks or not. I'm Angelo Coppola for CGTN in Johannesburg, South Africa."