SAA gets another bailout from Treasury

National Treasury has released a statement saying the ailing state-owned entity will receive another bailout.

FILE: South African Airways plane. Picture: AFP.

JOHANNESBURG – The National Treasury has announced on Saturday that it will financially bailout the ailing South African Airways (SAA), once again.

The financially troubled airline currently has a R2.3 billion debt with Standard Chartered Bank, and Treasury says the bailout will be used to pay that debt off to avoid a default.

The national carrier has been bankrupt and surviving on state-guaranteed loans, and failing to submit its financial statements.

In a statement released on Saturday, Treasury says the payment is done in terms of the Public Finance Management Act which gives Finance Minister Malusi Gigaba power to authorise the use of funds to defray expenditure of an exceptional nature.

The opposition says the bailout is a blow to the credibility of both the SAA board and the National Treasury.

The Democratic Alliance’s Alf Lees said, “The situation with the SAA just goes from bad to worse. We knew this was coming and we asked National Treasury on Wednesday in Parliament whether this would be necessary; we were reassured that negotiations with the banks were going well and there would not be a problem. That seems to have not been the case.”

Last week, Treasury Director-General Dondo Mogajane said if the SAA fails to meet its debt obligations, it will have a ripple effect on the government’s entire loan guarantee framework.

Mogajane was addressing Parliament’s Standing Committee on Finance during a meeting that saw a major clash between its chairperson Yunus Carrim and fellow African National Congress (ANC) Peace Mabe.

Mabe wanted SAA board chairperson Dudu Myeni to be allowed to update the committee on SAA’s precarious financial situation, something her party colleagues were opposed to as Myeni was the only board member present.

Mogajane said they’re in talks with banks in a bid to roll over loans worth around R9 billion in total that the country’s ailing national airline was due to repay by the end June.

“If we don’t meet our obligations, that is going to have a ripple effect into the whole guarantee framework of the whole of government. So, we understand the importance and the urgency of not acting carefully and acting in a very responsible way as we approach the maturity of these loans coming on 30 June.”

Mogajane said he’s expecting most lenders to agree to roll over the loans.

The Democratic Alliance’s Alf Lees, however, has told Eyewitness News that one major bank, which is owed around R2,3 billion, wants the loan to be repaid.

Another SAA official told MPs it wasn’t true that SAA was struggling to pay salaries.

It was reported by Moneyweb last week that SAA had to rely on a vat refund and a loan to pay salaries at the end of May.

Additional reporting by Gaye Davis.