SAA in talks with banks
South African Airways (SAA) is in talks with lenders about reviewing the terms of R9 billion worth of loans due at the end of the month and may have to tap government debt guarantees.
One bank told SAA it wants to be repaid by the end-June deadline, the carrier said on Monday, without giving further details.
Standard Chartered refused a request to extend a loan facility, the Sunday Times newspaper reported, citing anonymous sources.
It added that SAA owes the bank R2.3 billion.
“SAA has been in contact with its lenders to renegotiate the management of its loans, a normal occurrence when loans become due and payable. The renegotiation of the terms of the loans are ongoing and SAA is optimistic that the airline will continue to operate,” SAA acting CEO Musa Zwane said.
The carrier has R19.1 billion in state guarantees, a safety net that’s effectively keeping SAA solvent after six consecutive unprofitable years.
Government is considering ways it can help the airline return to financial stability while weighing offers for a minority stake. Finance Minister Malusi Gigaba said in May SAA had made “significant headway” toward a five-year plan aimed at returning the company to profit.
“SAA has a weak balance sheet, relies heavily on government guarantees to remain operational and has not been profitable in the last few years,” the airline said.
“The situation is not only undesirable but unsustainable and this led to the development of the turnaround plan that has been put in place.”
SAA hired US aviation consultancy Seabury Group in January to advise on the plan. – Bloomberg