The imports of serial political crisis hitting South Africa seem to have spread to the national carrier as despite a government injection of 10 billion rand ($709 million), the struggling South African Airways (SAA) still remain under-capitalised with a negative equity position of over 9 billion rand.
This revelation came from a recent presentation to parliament.
Investigations showed that the airline had been relying on government guarantee to keep it solvent and has been cited by major rating agencies as a threat to South Africa’s economy. It received the latest bailout in September.
The country’s strained public finances are in the spotlight ahead of ratings reviews by Moody’s and S&P Global due on Friday, with both agencies previously citing SAA as well as struggling electricity utility Eskom as major downgrade risks.
Only recently, the airline narrowly missed defaulting on debt repayments of around 5 billion rand ($374 million) owed to domestic lenders thanks to an emergency bailout by the National Treasury, which said a default posed a risked to the entire economy.
SAA has one of Africa’s largest airline fleets but has struggled, relying on around 20 billion rand of guarantees from government to stay afloat.
In September it said it planned to fly 23 percent fewer flights and retire some older aircrafts in order to bring down costs.
