SAA receives much-anticipated R5bn guarantee
The South African government confirmed on Tuesday that a much-anticipated, and highly controversial, R5-billion guarantee had been extended to South African Airways (SAA) for a period of two years, starting from September 1.
In a joint statement, the National Treasury and the Department of Public Enterprises (DPE) said the guarantee would be premised on a turnaround strategy to be approved by the Public Enterprises Minister Malusi Gigaba in concurrence with Finance Minister Pravin Gordhan.
“This will include SAA providing the DPE and Minister of Finance with the financing strategy for its planned purchase of a short- and long-haul fleet.”
The guarantee would enable the national carrier to borrow from the financial markets to ensure its viability as a going concern.
The announcement follows the high-profile resignations of eight SAA nonexecutive directors, including chairperson Cheryl Carolus, which was followed swiftly by the appointment, by Gigaba, of eight replacements to support the four remaining nonexecutive directors. Vuyisile Kona was nominated to replace Carolus.
Business Report wrote earlier this week that, without the guarantee, SAA’s auditors had been unable to finalise the accounts, without qualifying them.
The status of the accounts also emerged as central to what Carolus described as a “breakdown in the relationship with the shareholder”.
“Government is committed to working with SAA’s management and board of directors to ensure that SAA is a viable and a financially sustainable airline,” DPE and the National Treasury said.
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