South African Airways, the National carrier of South Africa, has been losing money for the last seven years and needs 792m – rand (£45m) from government for the bailout. Soon it may not be able to pay even salaries.
The Standard Chartered Bank has refused to extend the repayment of a loan and Treasury had to pay £125m to settle it. Malusi Gigaba, finance minister of the country, said SAA asked the treasury in March for a £560m recapitalisation and is expected to give an answer by October.
The report of Ernst & Young for the year 2015 showed that 60% of the largest contracts were improperly negotiated, poorly contracted or weakly managed.
NUMSA spokesperson of the National Union of Metalworkers of South Africa (NUMSA) said: “Corruption at SAA is rife, it’s clear that the state owned entity is being looted. SAA has lost billions because of tender irregularities.”
The deputy finance spokesman of the opposition Democratic Alliance, Alf Lees, said: “We believe that the directors are in breach of the South Africa companies act by continuing to trade recklessly knowing that SAA will not be able to meet its financial commitments and without any guarantee that the shareholder (the South African government) will be prepared to continue to bail them out.”
The unions are also threatening strike action over pay, claiming that the cabin crew, ground staff, cargo staff and technical staff have been refused wage rises whereas pilots have been getting generous pay awards.
According to information given to South African parliament, the national carrier is teetering on the edge of bankruptcy and if the airline enters bankruptcy protection it would limit the amount of money it pays to creditors.