Debt-ridden SAA has failed to make a profit since 2011 and survives on government bailouts
A state-owned South African bank has offered to lend 3.5 billion rand ($2.4 million) to the country's cash-strapped flag carrier South African Airways (SAA), the airline's administrators said Tuesday.
SAA was placed under a state-approved rescue plan in December and has been waiting for a payout of two-billion rand ($1.4 million, 1.2 million euros) from the Treasury.
The Development Bank of South Africa stepped in to cover that amount with a state-guaranteed loan of 3.5 billion rand ($2.4 million, 2.2 million euros) to SAA, administrators said in a statement.
"The advancement of the funds comes on the back of the business rescue process which began on 5 December 2019," the statement said.
Two billion rand would be drawn immediately, it added.
Debt-ridden SAA has failed to make a profit since 2011 and survives on government bailouts.
The rescue plan was a last-ditch bid to avoid total collapse following a week-long strike by thousands of its workers.
But the government has admitted it is still seeking a solution to finance SAA -- which was forced to scrap almost a dozen flights earlier this month.
"Stakeholders of the airline should now have comfort that the rescue process is on a significantly sounder footing," the administrators said.
"Passengers and travel agencies and airline partners may continue to book air travel on SAA with confidence."
SAA, Africa's second largest airline, employs more than 5,000 workers. It has a fleet of more than 50 aircraft flying to domestic and international destinations.