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South Africa’s loss-making airline to cut fleet in bid to turn fortunes

South African Airways received state funds in July to help to repay debts. (Reuters)
CAPE TOWN: South Africa’s struggling national airline SAA said on Wednesday five narrow-body aircraft would be retired from its fleet by December, causing an overall flights reduction of 23 percent, in a bid to return to profitability.
“One narrow-body aircraft has left the fleet, with four more expected to leave the fleet by December 2017,” a presentation to legislators said.
The airline runs one of Africa’s biggest fleets but is loss-making. It received state funds in July to help to repay debts and also depends on government debt guarantees of about 20 billion rand ($1.5 billion).
South Africa’s cabinet will make a final decision on how to recapitalize the airline by end September, Finance Minister Malusi Gigaba earlier said
“Before the end of September, we should have gone to cabinet, proposed the options and cabinet should have taken the decision,” Gigaba said.
“What is a fact is that there is a 10 billion rand capitalization that is required for South African Airways but the source or model of that recapitalization is not yet finalized.”
Gigaba said the other options include a share equity, public-private partnerships and “a full share swap in regard to the Telkom shares.”
South Africa is considering selling its stake in landline provider Telkom to fund SAA’s 10-billion rand bailout. The government holds a stake of about 39 percent in Telkom.
South Africa has also appointed Vodacom Group executive Vuyani Jarana as the carrier’s new chief executive to help for the state airline turn its business fortunes around.

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