State-owned South Africa Airways (SAA) says it has reached an agreement in principle with lenders to roll over 642 million dollars of debt.
Chief Executive Officer of the airways, Mr Vuyabni Jarana, stated this on Tuesday in a chat with newsmen at CAPA aviation summit in Dubai.
He said that SAA reached an agreement “in principle’’ about extending the maturities of its 9.2 billion rand (about 642 million dollars) debt burden.
Jarana, who did not give details of the agreement, said that talks with lenders were ongoing.
“The principle to roll over the debt has been struck but we do need to meet certain conditions,” he said.
The debt, which was due at the end of March, gives Jarana room to execute a turn-around aimed at weaning the airline off government bailouts.
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South African President, Cyril Ramaphosa, has made a point of supporting ailing state firms like SAA, which survive on government hand-outs, but the extent of their financial difficulties has meant slow progress.
SAA, which has not made a profit since 2011, has drawn up a five-year turn-around plan that includes slashing costs and cancelling unprofitable routes as it grapples with cost increases that far outstrip revenue growth.
Extending debt maturities for the long term will give Jarana, a former executive of mobile phone firm, Vodacom, room to focus on the turn-around plan that has pencilled in a return to profitability in 2021.
That forecast is largely dependent on the oil price staying at or below $75 a barrel, and the airline accessing a four-billion-rand injection from the government to fix its capital structure.
As part of the plan, Jarana said SAA was in the process of appointing advisors for the sale of its in-flight catering unit, Air Chefs.
He added that the airline was also looking at turning its no-frills unit, Mango, into a hybrid rather than a pure low-cost carrier.
