By Carin Smith
Cape Town – South African Airways (SAA) is open for business and will remain so, Finance Minister Pravin Gordhan said on Wednesday.
“The goal in the longer term is to ensure that the airline is able to operate without support from the state, as should be the case with all state-owned entities,” said Gordhan.
At the same time National Treasury said it has been in contact with several of the lenders currently providing SAA with unguaranteed short term facilities.
Citigroup cancelled a R250m short-term credit facility for SAA in December.
“Indications are that the banks are not intending to withdraw their facilities at this time. Regular engagements with lenders have been taking place since 2014 and will continue until the airline is stabilised,” Treasury said in a statement on Wednesday.
It added that it has been working closely with SAA to ensure that the airline has the cash it needs to meet its obligations when they fall due.
SAA submitted a request for a going concern guarantee during December 2015. National Treasury said it is currently considering this request.
“The approval of the guarantee is essential for finalising SAA’s financial statements on a going concern basis. Once finalised, the annual general meeting will be held and the annual financial statements will be tabled in parliament,” said Treasury.
Steps taken by Treasury to ensure that SAA can meet its obligations when they fall due include repatriating funds from overseas and efforts to secure further short-term bridging facilities.
“Of the R14.4bn in guarantees extended to SAA, the airline has R2bn it has not utilised, which can be tapped for additional financing,” according to Treasury.
Gordhan wants to ensure that SAA is stabilised in the short term and has cash to meet its requirements. He also wants to address governance and leadership issues. According to Treasury this would include the appointment of a full board and speeding up the process of appointing a permanent CEO. SAA has had about seven permanent or acting CEOs in less than four years.
In December SAA chairperson Dudu Myeni lost her battle to reconfigure a swap deal SAA had with Airbus. Then finance minister Nhalanhla Nene found at the time that the reconfiguration could have threatened the financial stability of SAA.
Last week Gordhan said SAA cannot become a liability to the fiscus.
SAA last posted a full-year profit in 2011 and has been surviving on R14bn of government-debt guarantees.
– Fin24
