Pressure on Gigaba to reveal details of SAA loans with banks
Treasury announced a R3-billion lifeline to the airline on Friday. R1.8 billion of that will be used to meet its commitment to Citibank.
CAPE TOWN - Pressure is now mounting on Finance Minister Malusi Gigaba to reveal what agreements have been reached with the banks to roll over loans to South African Airways (SAA).
Treasury announced a R3-billion lifeline to the airline on Friday. R1.8 billion of that will be used to meet its commitment to Citibank by Saturday's deadline.
It brings government's total financial backing to the airline so far this year to R5.2 billion.
On Thursday, the Democratic Alliance (DA) called on SAA to allow itself to be placed under business rescue.
The DA's Alf Lees said: “We’re not surprised although we’re obviously very disappointed. The minister has not done the right thing and resolved the future of SAA in a conclusive way. What he has done is to kick the can down the road and the problems just get bigger and bigger.”
Treasury spokesman Mayihlome Tshwete says the latest capital injection to SAA will be offset against the total recapitalisation amount, which will be announced by Gigaba next month.
The SAA was in July provided with state funds to help it repay loans of about R2.3 billion to Standard Chartered.
SAA already relies on government guarantees to support its finances.
Gigaba denied there was a plan to tap the government pension fund to bail out SAA.
SAA has been highlighted by all three major rating agencies as one of the problems facing South Africa’s economy.
The Treasury is under pressure to keep recent pledges to cut spending and reform governance at state firms to fend off credit downgrades deeper into “junk”.
Additional reporting by Reuters.
(Edited by Winnie Theletsane)