Beleaguered SAA gets R5?bln govt guarantee

2012-10-03 00:00

THE government has granted South African Airways a R5 billion guarantee for a period of two years starting from September 1, 2012.

Mayihlome Tshwete, spokesperson to Minister of Public Enterprises Malusi Gigaba, said the guarantee would enable SAA to borrow from global financial markets. “This guarantee will ensure that the airline continues to operate as a going concern.”

Gigaba has been meeting Treasury on behalf of SAA. The carrier told Parliament in February it needed between R4 billion and R6 billion for recapitalisation.

Gigaba told sister newspaper Beeld earlier that any financial assistance to SAA would go with stringent conditions.

One of the conditions just announced was that the guarantee requires that the SAA board develop a turnaround strategy to be approved by the minister in concurrence with the minister of finance.

SAA will also have to provide the Department of Public Enterprises and Minister of Finance with the financing strategy for its planned purchase of short and long haul fleet.

The national carrier is replacing its fleet with new Airbus aircraft that are more fuel-efficient than its existing aircraft.

The department said a technical committee comprising representatives from the national treasury and Public Enterprises would be appointed to monitor SAA’s financial position, and progress with developing and implementing the turnaround strategy.

Tshwete said government was committed to working with SAA’s management and board of directors to ensure that the airline was a viable and a financially sustainable airline.

Last week eight members of SAA’s board resigned after Gigaba decided to postpone the tabling of SAA’s annual results for 2012.

The minister said the decision was made to allow Treasury and Public Enterprises negotiations over the financial assistance to be concluded. A new board has since been appointed. — Finance24.

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