Government bailed out SAA with R3bn on Friday (September 29, 2017), a day before it was due to repay its debt of R1,8bn to Citibank, leaving the airline with a cash boost of approximately R1,2bn for "immediate working capital requirements".
“Government has approved the transfer of funds from the National Revenue Fund (NRF) to SAA to allow the airline to address the debt obligations to Citibank, thereby avoiding a default. Funds will also be used to assist SAA with its immediate working capital requirements,” said National Treasury in a media release.
“A default by the airline on the R3bn would have triggered a call on the guarantee exposure totalling R16,4bn, leading to an outflow from the NRF and possibly resulting in elevated perceptions of risk related to the rest of SAA's guaranteed debt.”
Treasury added that a plan to improve the financial situation of the cash-strapped airline would be provided during Finance Minister Malusi Gigaba’s mini budget speech in October.
