SAA creditors staying put, says Treasury

THE TREASURY had approached several undisclosed lenders providing credit facilities for SAA, it said yesterday, noting that they had indicated they did not intend to withdraw funding to the embattled national airline.

The statement followed the Citigroup decision to cancel a R250 million short-term banking facility two weeks ago amid growing concerns on the airline’s finances and instability in its leadership.

The Treasury said the decision to approach the lenders was to ensure that SAA was stabilised and had cash to meet its financial obligations.

It said SAA had submitted a request for a going concern guarantee towards the end of December, which it was cur- rently considering.

“The approval of the guarantees is essential for finalising SAA’s financial statements on a going concern basis,” the Treasury said. “Once finalised, the annual general meeting will be held and the annual financial statements will be tabled in Parliament.”

SAA last submitted its annual financial statements in January last year for the 2013/14 financial year.

The 2014/15 financial statement, which was due at the end of March, is still pending despite legislative requirements requiring it (to be presented to the) Treasury and report to Parliament within six months after year-end.

The statement showed that during the period, the airline had spent R5.5 billion in salaries and benefits for its 11 500 employees, R11bn in fuel procurements and R13.5bn in other procurements and operating costs.

Parliament has since given SAA until the end of this March to submit its 2014/15 financial statement.

But the continuing instability and lack of leadership flared in December when sacked finance minister Nhlanhla Nene questioned the SAA board’s funding model and ordered it to conclude the agreement to swop the purchase of 10 A320s for a lease of five A330s from Airbus.

Nene’s axing led to turmoil in the markets with the rand losing almost 90c to the US dollar and the banking index plummeting to its lowest level since 2008.

The Treasury yesterday said that engagements, which had been going on since last year, would continue until the airline was stabilised.

It said that of the R14.4bn in guarantees extended to SAA, the airline had R2bn it had not yet used, which could be tapped for additional financing.

Finance Minister Pravin Gordhan said his efforts were focussed on ensuring that the airline was stabilised and able to meet its cash requirements.

He said the Treasury was in the process of appointing a full board and a permanent chief executive who would be essential in ensuring that SAA returned to a strong 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 state-owned entities,” Gordhan said.