SAA at risk of running out of cash after credit cancelled

SA AIRWAYS (SAA) is at risk of running out of cash this month following the cancellation of a R250-million credit facility from Citibank in December‚ on which it depended for short-term funding.

SAA has both short-term and long- term financing difficulties‚ with R14-billion in funding required over the medium term to consolidate debt.

The news of the cancellation of the Citibank short-term facility appeared on business news website Moneyweb yesterday and was confirmed by Treasury spokeswoman Phumza Macanda.

Macanda said: “We are aware of the withdrawal of the Citibank facility and are working with SAA to ensure that [it has] sufficient liquidity.”

Moneyweb said an internal SAA document showed that the airline “will have no free cash available from January 15”.

The board has received repeated warnings over the past six months from executive management that SAA’s risk profile has been raised in the market, with the result that borrowing has become increasingly more expensive.

This is due‚ in part‚ to negative publicity over the company’s internal ructions and the dismissal of key executives.

In a memo in November to the board‚ general manager (legal and risk) Ursula Fikilepi warned that despite SAA’s R3- billion in government guarantees that could be used‚ “SAA is experiencing challenges in raising this funding as lenders are increasingly wary of assuming additional SAA risk”.

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