The South African government has confirmed that national carrier South African Airways (SAA) will receive recapitalization totaling ZAR10 billion ($700 million) in the 2017-18 financial year.

Delivering the government’s Medium Term Budget Policy Statement (MTBPS) Oct. 25, finance minister Malusi Gigaba said that ZAR5.2 billion had already been provided, with the remaining ZAR4.8 billion to be transferred by March 31, 2018.

The funds will be used for working capital and to settle debt, enabling the struggling airline to reduce its interest expenses.

Gigaba also revealed the government is to hold talks with the new SAA board over a new strategic equity partner to help the airline.

“After we meet the new board of SAA, we will pronounce on our plans to consolidate aviation assets and bring in a strategic equity partner,” Gigaba said.

“We believe a strategic equity partner can play an important role in SAA’s turnaround as well as unlocking value for the fiscus, which has invested significantly in the airline over the years.”

SAA has been losing money heavily for several years and has already received several government bailouts. The airline has been plagued by an aging fleet, internal inefficiencies, and a revolving door of CEOs whose short periods in office have often made it difficult for them to get to grips with the carrier’s problems.

However, in a statement, the government said it remained convinced that retaining a national carrier was in the public interest.

Last week, South Africa’s national treasury announced the appointment of six new members to SAA’s board.

The MTBPS noted the appointment of new CEO Johannes Magwaza—who will commence his duties Nov. 1—is a critical step in ensuring that the airline's turnaround strategy is aggressively implemented.

Welcoming the announcement of the latest capital injection, SAA said it would “go a long way towards stabilizing the airline financially and will help restore the confidence of all stakeholders in the operational sustainability of the company.”

The carrier said it was sensitive to the fact that it had been granted the funds at a time of considerable competing demands for government funding. It acknowledged the airline’s turnaround plan “must switch to a higher gear and reassure through results all stakeholders that the airline is on course towards financial sustainability.”

Alan Dron alandron@adepteditorial.com