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JOHANNESBURG, Nov 27 (Reuters) - The South African government is working on “immediate actions” to ensure cash-strapped South African Airways’ (SAA) survival, the public enterprises ministry said on Wednesday, warning the airline could not “continue as is”.
SAA, which hasn’t made a profit since 2011 and is dependent on government bailouts to remain solvent, suffered a crippling strike this month which pushed it to the brink of collapse.
The airline needs to secure more than 2 billion rand ($136 million) of working capital to continue operations, but commercial banks won’t lend SAA more money without additional state guarantees.
Finance Minister Tito Mboweni is trying to wean ailing state firms off government support and has not yet granted those guarantees.
The public enterprises ministry, which oversees SAA, said it was working with SAA to enable it to carry on its business. But it said “SAA cannot continue as is” and that further details would be provided over the next week.
Mboweni’s spokeswoman was not available for comment.
Investors want to see evidence that South Africa is serious about reining in runaway spending. Moody’s is the last of the three big international ratings agencies to have South Africa’s sovereign debt in investment grade but has a negative outlook on that rating.
$1 = 14.7075 rand Reporting by Alexander Winning; Editing by David Evans and Emelia Sithole-Matarise