Cash-strapped SAA needs another R535?million

2013-02-08 00:00

THE government-controlled SA Airways must borrow a further R535 million against its government surety to cover running costs.

The airline received R400 million in January.

A source close to the airline who wants to remain anonymous disclosed the latest amount to sister paper Beeld and said it was necessary to to pay for fuel and salaries.

SAA spokesperson Tlali Tlali yesterday confirmed that SAA needs cash, but did not want to confirm the amount of R535 million.

He said the airline would borrow the money from financial institutions against a two-year, R5 billion government guarantee that Treasury gave to SAA in October last year.

He said the R5 billion was divided in two parts, of which R1,5 billion was valid only until March 31.

Against this the airline had borrowed R400 million to date and was about to borrow an additional amount.

“This amount is less than the balance of R1,1 billion.”

The Treasury had to give the guarantee last year after SAA reported a loss of R1,3 billion and expressed disquiet about its ability to continue as as a running concern.

The airline is facing high operating costs due to record high oil prices and a balance sheet with most of its assets written off.

The financial constraints date back to 2004, when the airline lost R6 billion in a financial hedging position.

The hedge was taken to protect the airline against the threat of increasing oil prices, but the price of oil dropped, leaving the airline paying more for less.

The airline has since 1992 reported losses totalling some R17 billion.

Natasha Michael, Democratic Alliance spokesperson for public enterprises, said yesterday the vagueness about the scope of the SAA’s financial crisis was a problem. Why does the airline need money every month? Where is the money going?

“At first we were told SAA needs the guarantee for recapitalisation. Now there is this U-turn and we are told the money is needed for running expenses. There is no transparency.”

SAA had also not divulged any details of its turnaround strategy, said Michael.

Tlali said it was always the plan to use part of the funds raised to cover running expenses.

He said SAA was still negotiating with banks to borrow the money.

He said the turnaround strategy would be submitted to the minister of Public Enterprises at the end of March.

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