Development Bank of Southern Africa throws SAA a lifeline

SAA is believed to have secured loan funding from the Development Bank of Southern Africa (DBSA) needed to run the airline during the business rescue process.

The airline had initially sought R4bn to fund the rescue while it was being restructured, but it is believed that amount has since grown to R5.5bn. The first R2bn was provided through a loan from a consortium of commercial banks.

The exact size of the loan from DBSA is expected to be announced on Tuesday. It will be fully guaranteed by the Treasury.

The decision to raise the money on behalf of SAA, which is unable to access commercial banks independently, comes after the ANC decided at its national executive committee meeting that SAA must be retained as the national airline.

This means that apart from the R5.5bn that has been put into the restructuring during business rescue, substantial additional funding will be required to bankroll SAA until it is able to reach a position of sustainability.