Supplementary Budget 2020

SAA gets R5bn, told to restructure debt

State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.
State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.

The National Treasury allocated R5bn to help South African Airways (SAA) to repay debt, but said the state-owned airline will have to engage with creditors to restructure almost double that amount.

SAA has R14.2bn of repayments due by March, the Treasury said in its mid-term budget statement on Wednesday. The company “is not generating sufficient cash to repay its total debt, and will have to negotiate with lenders to refinance or extend maturity dates,’’ it said.

The carrier is one of “several” state-owned companies that will struggle to refinance or redeem debt without government assistance at a time when access to credit is becoming more difficult due to weak balance sheets, poor governance and liquidity challenges, the Treasury said.

Contingent liabilities due to government guarantees for debt of state companies is a major risk to the fiscal path, it said.

State-owned firms have a combined debt load of R1.6trn, of which R670bn is guaranteed by the government, according to the budget review. Debt redemptions by the 10 biggest borrowers will average R66bn annually in the next two fiscal years, more than government repayments due over the same period.

Assistance to other state institutions announced in the budget review includes:

A R5.8bn allocation to the South African National Roads Authority to help repay debt due over the next three years, R2.9bn to the South African Post Office and R1.2bn to South African Express Airways.

These allocations will be paid from a contingency reserve and unspent funds from other government departments, the Treasury said.

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