Treasury seeks conditions on SAA loan guarantees

0:00
play article
Subscribers can listen to this article
A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
Silas Stein/picture alliance via Getty Images

South Africa’s National Treasury wants strict conditions attached to any guarantees it provides for loans to the country’s embattled state airline, according to two people familiar with the matter.

Treasury and Department of Public Enterprises officials met Saturday to discuss ways to restart South African Airways, the people said, asking not to be identified because the talks are private. Representatives of two South African banks attended the talks, they said.

SAA halted operations and sought bankruptcy protection in December. The carrier’s administrators say 10.5 billion rand is needed for the airline to resume operations. Finance Minister Tito Mboweni is prepared to provide guarantees on R4 to 5 billion of that amount, subject to stringent criteria, the people said.

It’s unclear where the funding would be sourced from and there’s no agreement yet on any bailout, the people said. President Cyril Ramaphosa has backed the airline’s rescue, they said.

National Treasury spokeswoman Mashudu Masutha-Rammutle and SAA spokesman Tlali Tlali referred requests for comment to the DPE, whose spokesman Sam Mkokeli didn’t immediately respond to a request for comment. The carrier’s business-rescue practitioners didn’t immediately respond to a request for comment.

Equity Partners

Treasury guarantees may encourage private lenders to provide financing to SAA, the people said. Any government funding may also help ensure a future equity-partner deal, which is currently envisaged by the end of the year, the people said.

Twenty private-sector funders, private-equity investors and partners have submitted unsolicited expressions of interest in a restructured SAA, and those are being assessed, the Department of Public Enterprises said.

Ethiopian Airlines Group is in talks with SAA about providing assistance, people familiar with the situation have said. The Addis Ababa-based carrier is seeking control, possibly in the form of a management contract, and that may be a sticking point, the people said.

 - With assistance from S'thembile Cele and Paul Vecchiatto.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
ZAR/USD
16.25
(+0.61)
ZAR/GBP
21.09
(+0.35)
ZAR/EUR
18.97
(+0.77)
ZAR/AUD
11.44
(+0.64)
ZAR/JPY
0.16
(+0.58)
Gold
1875.43
(+0.39)
Silver
23.44
(+0.74)
Platinum
853.00
(+0.53)
Brent Crude
38.07
(-3.48)
Palladium
2197.50
(-0.14)
All Share
51867.86
(-0.06)
Top 40
47677.29
(+0.21)
Financial 15
9572.44
(-1.89)
Industrial 25
73826.67
(+1.58)
Resource 10
47292.81
(-1.12)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, and I've gotten it.
23% - 142 votes
No, I did not.
51% - 309 votes
My landlord refused
26% - 160 votes
Vote