Bailout given to SAA part of plans to make it commercially viable – Treasury

The National Treasury has transferred another R3 billion from the National Revenue Fund to the airline to help it repay part of a loan from Citibank, due today.

South African Airways planes. Picture: Facebook.com

CAPE TOWN – Treasury says the bailout it’s given to South African Airways (SAA) is part of plans to make the airline commercially viable.

The National Treasury has transferred another R3 billion from the National Revenue Fund to the airline to help it repay part of a loan from Citibank, due today.

The rest of the money will be used to pay staff salaries and for other operational expenses.

Finance Minister Malusi Gigaba is expected to announce how the government plans to fund the rest of its R10 billion recapitalisation of the airline when he delivers his medium-term budget statement next month.

Treasury spokesperson Mayihlome Tshwete says the money is not a loan that is repayable because the government expects the airline to become profitable in future.

“SAA must begin to function as a commercial entity and it’s starting to make those hard decisions right now.”

At the same time, 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 said the money is not a loan, but a recapitalisation.

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.

Treasury said 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.

(Edited by Leeto M Khoza)