A rescue plan for South Africa's flag carrier has yet to get off the ground since the government has not provided promised funding, with the upcoming budget looming as a crucial test for its future.

State-owned South African Airways (SAA) had limped along for a decade thanks to regular government bailouts but last December Pretoria decided to let it sink into adminstration in the hopes of a profound restructuring to stanch the flow of red ink and wipe away debts.

Administrators axed most domestic and some international routes in February to save cash -- even before coronavirus grounded airlines globally -- as they drafted a massive restructuring plan to create a leaner, competitive airline.

Creditors in July gave the green light even though they will be paid only 7.5 cents for each rand they are owed.

The plan would see the airline shrink dramatically, emerging with a fleet of just six aircraft out of the 44 it had last year. Only a fifth of the almost 5,000 employees would remain.

The aim is then to grow it back to 26 planes by the end of 2021 and re-hire 1,000 furloughed staff.

The plan requires five billion rand ($302 million) to kick-start and another 5.3 billion rand over three years, which the government has pledged to finance, as well as bringing in a well-heeled strategic partner.

But the money has yet to materialise.

Finance Minister Tito Mboweni is expected to announce details of the funding when he presents his medium-term budget at the end of October.

Analysts warn that failure to move ahead quickly could sink the restructuring plan.

Market researcher Peter Attard Montalto, of South African firm Intellidex, said creditors are growing "restless" and risked voting for liquidation at their next meeting with administrators, a date for which is not yet set.

"They are increasingly assuming they will never get any money," he said.

While the administrators believe the restructuring plan is still viable -- if the money comes soon -- they have also evoked more severe solutions.

South African Airways will only take to the skies again if the government recapitalises the airline
South African Airways will only take to the skies again if the government recapitalises the airline AFP / GIANLUIGI GUERCIA

"The plan is looking good in terms of what we needed to set up to orchestrate it," the administrators' spokeswoman Louise Brugman told AFP. "Now we need the money."

Administrators have suggested winding down the airline as an alternative -- stripping the company to the bare bones but keeping its licenses, allowing the airline to fly again if the opportunity arises.

That would still require an injection of more than four billion rand.

The government has resisted this option as well as the airline's complete liquidation.

The Department of Public Enterprises did not reply to AFP's request for comment, but its director general Kgathatso Tlhakudi told local television network Newzroom Afrika on Monday that three possible strategic partners for SAA had been shortlisted.

"Provisionally there are... three strong entities," including two international ones, he said.

It is not clear if these include Ethiopian Airlines.

Africa's largest carrier has offered to help SAA start afresh by providing planes, technical services and management assistance, but said it will not take a stake, and thus will not help finance its rescue.

Analysts also question whether the overhaul -- if it goes through -- will be enough to save the carrier, particularly considering the impact of coronavirus on global air travel.

"The plan is too much of a status quo," Montalto said.

"It is not really targeted to plug a gap in the market. I think it will require another bailout in two or three years' time," he predicted.

Aviation expert Linden Birns worries about the impact of creditors having been burned by the restructuring.

"A lot of those are companies that would have traditionally done business with the airline," he noted. "Now they will think twice before granting generous credit terms or discounts."

That will make it difficult for the new SAA to succeed.

Birns said it is becoming increasingly hard to even justify SAA's existence.

"They seem to be quite dogmatic about rescuing the airline... I can only guess there are political imperatives at play," he said, deploring the job losses.