UPDATE 1-South African Airways says flights operating normally after bailout talks stall

South African Airways (SAA) said on Monday that its flights to all destinations were operating normally, after talks over the weekend on a bailout plan for the state carrier ended with no solution.

Government officials are scrambling to work out how they can provide 2 billion rand ($138 million) of funds they promised when SAA entered a form of bankruptcy protection last month. The airline's business rescue practitioners held talks with the government at the weekend to try to find a solution on the funding gap. But as of Sunday evening, no solution had been found, a person briefed on the talks told Reuters.

Last week, a senior trade union official said SAA could have to suspend some flights and delay salary payments if the government didn't come up with a plan to provide the 2 billion rand soon. "Flights to all its destinations continue as normal," SAA said in a statement.

"Where there may be flight schedule amendments, such operational changes will be managed and communicated in accordance with the industry norms." On Sunday, the public enterprise's ministry said it was talking with the National Treasury to raise funds for SAA.

The airline is one of several South African state entities, including power company Eskom, mired in financial crisis after nearly a decade of mismanagement. State companies' financial problems are seen as the single greatest threat to South Africa's economy and have been largely responsible for pushing the country's credit rating down to the brink of junk status. ($1 = 14.5400 rand)

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