In what is called an 11th-hour save for South Africa’s national carrier, SAA, the country’s government on Friday approved the transfer of funds for the airline to meet its debt obligations with Citibank and avoid a default of R3bn.
Due to be settled by 30 September, Citibank advised the airline that it will not grant an extension on the full loan amount of R1.8bn. In total the airline owed nearly R7-billion in debt. And the directive from Citibank to pay back the loan amount owned to them comes only two months after receiving a government bailout of R2.3-billion to pay back money owed to Standard Chartered Bank.
In a statement on Friday the Treasury said the money will be transferred from the National Revenue Fund to help SAA with its “immediate working capital requirements” and to avoid defaulting on their Citibank loan. The statement added that the transfer was approved in accordance with the Public Finance Management Act.
Earlier this month, the airline announced plans to introduce network enhancements which are in line with the implementation of its newly developed five-year Corporate Plan in order to improve schedule efficiencies.
The five-year plan is believed to save the airways from financial instability.
“There is every urgency to aggressively implement this turnaround plan in a manner that shows results in improved efficiencies and ensure schedule integrity for all our customers. We are therefore monitoring route performance and have made some capacity adjustments to align our schedule and frequency for sustainable and profitable outcomes.
“Demand in Central Africa has remained at levels similar to last year due to slow economic growth in the region. Our intention therefore is to maintain our presence in these markets, and we have initiated discussions with our partners to decide on the best option to serve these markets”, said SAA spokesperson, Tlali Tlali.
In addition to the five-year plan, SAA has cut down on flights. However, the airline assured that it will honour its obligation to all ticketed customers who have purchased tickets well in advance.