South Africa Says Banks Don’t Intend to Halt SAA Facilitiesby
Regular talks with lenders will continue until airline stable
Treasury considering SAA request for going-concern guarantee
Several lenders providing South African Airways, the country’s unprofitable state-owned airline, with short-term facilities that are not guaranteed have indicated they don’t plan to withdraw their funding, South Africa’s National Treasury said.
The government is in regular talks with lenders and these will “continue until the airline is stabilized,” the Pretoria-based ministry said in an e-mailed statement on Wednesday. “SAA is open for business and will remain so,” Finance Minister Pravin Gordhan said.
The carrier recently lost access to a short-term credit facility from Citigroup Inc. and has been surviving on about 14 billion rand ($834 million) of government-debt guarantees, after last posting a full-year profit in 2011. SAA has had seven acting or permanent chief executive officers in less than four years.
South Africa’s Treasury is also considering a request made in December for a going-concern guarantee from the airline. The approval of the guarantee “is essential for finalizing SAA’s financial statements on a going concern basis,” it said.
SAA’s board reports to Gordhan and the Treasury is focused on ensuring the airline has enough cash to meet its requirements, the appointment of a full board and permanent Chief Executive Officer. It also aims to ensure that the carrier returns to a “stronger financial footing in the medium to longer term,” it said.