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Cash strapped South African Airways denies selling off part of it business to raise funds

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South African Airways (SAA) has dismissed local media reports that it plans to sell off parts of its business to raise funds after banks declined to loan the cash-strapped airline more money.

Reports in a South African newspaper had suggested the airline’s cargo operations and catering business, Air Chefs, had been earmarked for sale.

State-owned SAA has been in financial difficulties for some years and has only survived through several infusions of cash from the government.

“It is not true that we have decided to dispose of some of our assets based on the fact that the banks are reluctant to lend more money to SAA,” an airline spokesman told ATW. “We still have guarantees available to us and [have] managed to extend the maturity date of existing loans to end of March 2019.

“While the time may be limited, the shareholder [the government] still has a window of opportunities to work with us to find solutions to our capital requirements. For assets to be disposed, there are certain legislative requirements which must be dispensed with for shareholder approval to be met. Claims made in the media are unsubstantiated and have ignored the realities and compliance requirements that must be satisfied.”

The spokesman declined to comment on reports that SAA was again heading for a heavy loss in the current financial year, saying only that the carrier would publish its financial statements once they had been signed off and tabled in the country’s parliament.

He added: “We are on record indicating that SAA will reach a breakeven point in financial year end 2021.”

The had been several reasons behind the losses of recent years, he said, including currency volatility—the South African rand has fallen against major currencies—together with “fluctuating fuel costs, competition, low productivity and excess personnel.”

Asked if SAA would be seeking another financial bail-out from the South African government, he said: “Our shareholder is aware of our funding requirements over the next three years. SAA has received some capital injection from its shareholder only recently. It will take time to return to profitability and we have paced ourselves to success provided we receive support. We are confident that SAA will return to profitability in FY2021.”

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