Treasury ensures continued credit for SAA

THE Treasury has taken steps to ensure that SA Airways’ (SAA’s) creditors do not pull the plug on the embattled airline‚ which is experiencing a severe cash crunch.

Finance Minister Pravin Gordhan insisted yesterday that “SAA is open for business and will remain so”‚ reaffirming that the national carrier would not be allowed to go under.

The sharp deterioration in the dollar value of the rand has exacerbated the cash crisis at SAA as the cost of jet fuel has soared.

Gordhan said the Treasury had been in contact with several lenders that had provided SAA with unguaranteed short-term loans.

“Indications are that the banks are not intending to withdraw their facilities at this time‚” the Treasury said.

“Regular engagements with lenders have been taking place since 2014 and will continue until the airline is stabilised.”

Other measures taken to ensure that SAA meets its cash obligations include repatriating funds from overseas‚ and efforts to secure further short-term bridging facilities on the basis of the R2-billion remaining of SAA’s total state guarantee of R14.4billion.

The Treasury said it was considering SAA’s request for a going-concern guarantee‚ which was submitted last month.

The approval of the guarantee is necessary to enable SAA to finalise its annual financial statements on a going-concern basis.

Once the statements are finalised, SAA will be able to hold its annual meeting and submit them to parliament.

Gordhan aims to stabilise SAA in the short term and address its governance and leadership issues – like appointing a full board and speeding up the process of appointing a permanent chief executive – which he has said were essential for stabilising the airline.

In the medium to longer term‚ the aim was to establish SAA on a stronger financial footing.

“The goal in the longer term is to ensure that the airline is able to operate without support from the state‚ as should be the case with all stateowned entities‚” Gordhan said.