Preliminary projections for a restructured South African Airways indicate the carrier would lose close to R20 billion ($1.1 billion) over the first three years, before it started turning a profit.

The operation would have a fleet of 40 aircraft, according to a draft business plan obtained by the country’s political opposition.

But it indicates that the fleet would be halved to 22 in the third year.

Over the first year the operation would lose R8.1 billion, followed by another R7.5 billion and R4.2 billion in the second and third.

But from the fourth year, and the immediate successive years, the company would trade with a positive earnings margin of 2-3%.

South Africa’s government is prepared to provide R21 billion in funding to restructure SAA, the draft plan states.

It has agreed to provide a working capital injection – estimated at “not less” than R2 billion – to restart operations once coronavirus-related travel bans are relaxed.

Up to another R2 billion would be required to fund employee retrenchment.

But the majority of the funds would be allocated to paying lenders – a figure put at R16.4 billion – while another R600 million would be put towards creditor payments.

South Africa’s political opposition, the Democratic Alliance, is holding up the draft plan as evidence that the business rescue of SAA has been “hijacked” by the government’s department of public enterprises, whose minister, Pravin Gordhan, has championed a rebuilding of the operator.

“If this draft business rescue plan is approved in its current form, SAA will continue to be a fiscal black hole for years to come,” the party says, describing the creation of a new state airline as an attempt to “resurrect the folly of failure”.

The draft suggests the current structure would migrate to a new arrangement with the establishment of a ‘New HoldCo’ holding company, which would take over the current SAA and operate the restructure airline alongside other divisions including Mango, SAA Technical, and Air Chefs.

But the Democratic Alliance argues that rescuing SAA amounts to “insanity” and that the “only credible course” is for the business rescuers to apply to liquidate the carrier.