South African Airways warns it expects a ‘loss situation’ in 2011-12 after two years of profit.

South African Airways (SAA) has warned it would post a loss this financial year and said it was in talks with the government for a recapitalisation of about R4bn-R6bn to fund operational costs, its growth strategy and fleet renewal.

The injection of state funds would be in addition to the R1,3bn subordinated loan SAA already has from the government, and the R1,6bn “going concern” guarantee it obtained to underpin its cash requirements after the auditor-general raised concern last year about its ability to generate sufficient cash to fund operations.

This year we will have to go through the same process and the guarantee required will probably be higher,” SAA chief financial officer Wolf Meyer told Parliament’s public enterprises committee yesterday.