SAA won’t have to repay R10bn to government

Treasury Director General Dondo Mogajane says the money is not a loan, but a recapitalisation.

Picture: AFP.

CAPE TOWN - South African Airways (SAA) won't have to repay any of the R10 billion it will receive in guarantees and cash from government coffers this year.

Treasury Director General Dondo Mogajane says the money is not a loan, but a recapitalisation.

On Friday, government transferred R3 billion from the National Revenue Fund to the airline to repay a loan that comes due on Saturday.

This brings the amount of money Treasury has forked out to SAA in the past three months to more than half the R10 billion government plans to inject into the airline this year.

The money is just a temporary, quick fix to keep the planes in the sky and Treasury maintains the long-term goal is to get the national carrier to the point where it can stand on its own two feet.

Finance Minister Malusi Gigaba is expected to unveil a long-term plan to make that happen when he delivers his mid-term budget statement in October.

Treasury spokesperson Mayihlome Tshwete said: “SAA must begin to function as a commercial entity. It's starting to make those hard decisions now as we speak.”

Treasury says it had to dip into the national fiscus to help SAA meet its commitments because if the airline defaults on its loan repayments to the seven banks it borrows from, it will be far worse for taxpayers.

Such a default could also knock on to other state entities who borrow from those banks, as they could decide to call in their debts.