South Africa to support SAA financially in FY2018, aviation asset review to be complete in Mar-2017

South Africa's National Treasury, in the 2017 National Budget, reported (22-Feb-2017) the financial position of South African Airways (SAA), as follows:

• SAA reduced losses from ZAR5.6 billion (USD431.8 million) in FY2014/15 to ZAR1.5 billion (USD115.6 million) in FY2015/16, mainly due to lower fuel prices and lower asset impairments;
• The carrier remains technically insolvent and its going concern status depends on state guarantees totalling ZAR19.1 billion (USD1.47 billion). The Government continues to help SAA secure funding with existing lenders;
• Liquidity constraints are expected to persist in the medium term. The Government will work with the SAA board to reduce associated risks;
• The Government will provide some financial support to the airline in FY2017/18, "in a manner that does not increase the budget deficit." The Treasury added, "The support will strengthen the new board's ability to effect a comprehensive turnaround strategy that allows SAA to function on a financially sustainable basis";
• Advisors are assisting the Government with a review of state aviation assets. The review is expected to be complete by the end of Mar-2017. The possibility of merging SAA and SA Express and introducing a strategic equity partner will be considered. Treasury said, "The goal is to develop a stronger, more efficient and sustainable state aviation sector";
• SAA's board is finalising the recruitment of a new CEO and CFO. The process will be submitted for Government approval.

Minister of Finance Pravin Gordhan said he held a "constructive" meeting with the SAA board in Feb-2017, commenting: "It demonstrated that the new board members have a good grip of the situation. We are optimistic that if we do the right things, and they do the right things - and find a new CEO [and] CFO - there will be good prospects of the airline turning around" (Fin24, 22-Feb-2017). [more - original PR]