South African Airways receives funds from Treasury to repay loan
October 4, 2017: Finally, the South African government has approved the transfer of funds from the National Revenue Fund to the South African Airways (SAA).
October 4, 2017: Finally, the South African government has approved the transfer of funds from the National Revenue Fund to the South African Airways (SAA). Mid-September it was clear that to keep SAA afloat, the Treasury has to infuse R10bn into the Airways. The capital infusion required passing a special appropriation bill for the said amount in the Parliament.
The fund transfer will help SAA to meet its debt obligations and avoid a default of R3bn.
Recently, Citibank had refused to roll over its R1.8bn loan. There were efforts in negotiations with the bank and other lenders to get the loans extended.
Treasury said the amount transferred would also assist South African Airways with its immediate working capital requirements.
"This payment was done regarding section 16 of the Public Finance Management Act. This section of legislation states that the minister can authorise the use of funds to defray expenditure of an exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds. The due process laid out in the legislation will be followed," Treasury said in a statement, reports newspapers.
SAA has state guarantees amounting to R19 billion. Treasury said that improving SAA's financial positions through a recapitalisation had been on government's agenda for a while.