South African Airways (SAA) says it currently has outstanding debt of over R20 billion. Board member Martin Kingston says it is clear that SAA has unsustainable levels of debt.
Kingston says repaying R3.5 billion will allow them access to additional liquidity.
SAA says it will be profitable in the next three years if there is no increase in fuel prices, inflation and the currency exchange rate remains stable.
Kingston says the airline’s urgent mandate is to give the banks confidence that they can restructure their current debt.
“The lenders, if they want to lend further capital, they have to be assured of the fact that their existing exposure if it is restructured, it is repaid, when it’s supposed to be repaid. At the moment the R3.5 (billion) and the R9.2 (billion) is a longer term loan and the R3.5 (billion) was a bridge facility to be repaid at the end of July. We are in discussions with the lenders about repaying the R3.5 (billion) and extending the R9.2 (billion) over a protracted period of time.”
SAA has not made a profit since 2011.
Issues of corruption
SAA says they are also filling key posts. “Corruption and malaise have been a fundamental tax of the airline over many years and it has not been appropriately addressed. The board has created sub committee that is going back in time to address all issues of corruption.
“On the routes that we operate, we are already beginning to see the benefits of those flow through. And the organisational structure again; and it is well known that we are going through an organisational design that will make sure that we have the right structure,” adds Kingston.