SAA chief upbeat on meeting R9bn loan obligations
South African Airways (SAA) is due to pay back R9bn to its lenders by the end of June, with one lender of an unspecified amount having said it wants to have its loan paid back, the airline said on Monday.
Musa Zwane, acting CEO of the struggling state-owned airline, said he was optimistic that SAA would meet its loan obligations as these became due through negotiations with lenders and other initiatives. If it were unable to pay back a loan, it would have to make a call on its government guarantee that now totals R19.1bn and Treasury would have to cough up.
"SAA has been in contact with its lenders to renegotiate the management of its loans, a normal occurrence when loans become due and payable. Engagements with lenders remain sensitive and confidential and it would be unwise to share salient details with third parties," Zwane said.
"The renegotiation of the terms of the loans are ongoing and SAA is optimistic that the airline will continue to operate, honour its obligations to its customers, suppliers and partners."
Zwane’s comments followed a statement at the weekend by DA deputy finance spokesman Alf Lees in which he referred to a report that Standard Chartered Bank had declined to renew its loan facilities with SAA. Lees warned of the danger of other lenders calling up their loans and said the only way out of the mess that SAA was in was for it to apply for business rescue.
SAA said it had made headway in putting together a "comprehensive and robust" five-year business plan aimed at tackling its challenges and to achieve more efficiencies and financial stability. "The leadership ... is alive to liquidity and solvency challenges that face the business and has taken steps to ensure that the airline remains in business," it said.
Work on the plan to achieve commercial sustainability started in January. Global airline turnaround consultancy Seabury was brought in to assist. Details of the plan will be announced once approved by Public Enterprises Minister Lynne Brown.