The South African government has confirmed it has again drawn an unspecified amount of capital from the country's National Revenue Fund (NRF) to pay off a ZAR1.8 billion rand (USD133 million) loan owed by South African Airways (SA, Johannesburg O.R. Tambo) to Citibank due by September 30. The drawdown will also be used to provide the ailing national carrier with working capital.

The announcement came after the financial institution, this week, refused to roll over the debt during talks with the government and airline officials. Earlier this year, in June, Standard Chartered refused a similar request on a maturing ZAR2.2 billion (USD163 million) loan forcing the Treasury to again use the NRF. The NRF is a facility which houses all tax revenue and which is reserved for emergency situations, along with other government functions.

As such, Finance Minister Malusi Gigaba has justified the draw-down on the grounds that the public interest would be seriously prejudiced if SAA had defaulted.

"A default by the airline on the ZAR3 billion would have triggered a call on the guarantee exposure totaling ZAR16.4 billion (USD1.242 billion), leading to an outflow from the NRF and possibly resulting in elevated perceptions of risk related to the rest of SAA's guaranteed debt," the Treasury said in a statement issued on Friday, September 29.

Pretoria is also looking at various largescale funding options to bailout SAA among which is the possible sale of its 39.3% stake in telecommunications provider Telkom currently valued at ZAR12.3 billion (USD909 million). An update will be provided during the Medium Term Budget Policy Statement due on October 25, 2017.

With future funding under consideration, SAA has embarked on yet another restructuring plan aimed at adapting capacity to demand across its domestic and regional networks.

“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," spokesman Tlali Tlali said. "We are therefore monitoring route performance and have made some capacity adjustments to align our schedule and frequency for sustainable and profitable outcomes."

In tandem to the impending withdrawal of five wide-body and four narrow-body aircraft, the carrier has cut 4x daily flights from Johannesburg O.R. Tambo to Port Elizabeth to only two a day‚ while service to East London has been reduced from three to two flights per day.

On the regional front, service to the Republic of Congo (Pointe Noire and Brazzaville) has been cut from 3x to 1x weekly and will be dropped by October 7; Douala (Cameroon) from 3x weekly to 1x weekly; Libreville Leon M'Ba (Gabon) from 6x weekly to 3x weekly); Cotonou Cadjehoun (Benin) from 3x weekly to 2x weekly; Kinshasa N'Djili (Democratic Republic of Congo) from 3x weekly to 2x weekly; Entebbe/Kampala (Uganda) from 4x weekly to 3x weekly; and Luanda 4 De Fevereiro (Angola) from 7x weekly to 3x weekly.