September 18, 2019 / 9:16 AM / a month ago

UPDATE 1-South African Airways cash injection imminent but says it needs more

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CAPE TOWN, Sept 18 (Reuters) - South Africa’s cash-strapped national airline SAA says a government cash injection of 5.5 billion rand ($376 million)approved for the 2019/20 financial year is expected at the end of the month but it still needs more money, a presentation to lawmakers showed on Wednesday.

South African Airways (SAA) has debt of about 12.7 billion rand, consisting of 9.2 billion rand of legacy debt and a 3.5 billion rand working capital facility provided by banks.

The airline requires 2 billion rand by December to fund working capital for its 2019/20 financial year, the presentation said.

SAA, the turnaround strategy of which has been stymied by mismanagement and inability to service its debt in an increasingly competitive aviation environment, also received a 5 billion rand government bailout in its 2018/19 financial year.

The state-owned flag carrier’s long-term strategy is based on an equity injection of nearly 22 billion rand. The government, meanwhile, wants further cost reductions before committing more money during a time of weak domestic growth and is also considering how it might find a commercial partner for the airline.

In the presentation, SAA said it is in negotiations with lenders to make 2 billion rand available for working capital, adding that it would have to meet certain conditions to obtain the funding.

“Lenders have the following conditions,” it said. “Repayment of short-term funding of 3.5 billion rand by September 2019, which is already provided for, and a debt reduction and payment plan for the legacy debt of 9.2 billion rand.” ($1 = 14.6272 rand) (Reporting by Wendell Roelf Editing by David Goodman)

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