The government of South Africa has stepped in with a loan repayment on behalf of South African Airways (SA, Johannesburg O.R. Tambo) to prevent the airline from defaulting on a matured debt with Standard Chartered Bank. ZAR2.2 billion (166.5 million) has been drawn from the National Revenue Fund (NRF) to allow the airline to pay off the loan, according to a National Treasury statement.
"A default by the airline would have triggered a call on the guarantee, 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 statement said.
The debt-laden airline's other loans totalling approximately ZAR6.8 billion (USD512 million) have been renegotiated, supported by a government guarantee of ZAR19.1 billion (USD1.47 billion).
South Africa's opposition party, the Democratic Alliance (DA), has come out strongly against the loan. In a statement, the DA says that by calling in its loan, Standard Chartered Bank has shown it has no faith in the leadership of South African Airways.
"This taxpayer bailout makes no difference to the cash crisis at SAA. SAA is losing in the region of ZAR370 million (USD27.8 million) every month and is apparently scratching for cash to pay salaries," a party statement says. "This emergency funding for SAA indicates the serious crisis that SAA has been mismanaged into."
Meanwhile, SAA Chairwoman Dudi Myeni is facing increasing pressure to be removed from the position. As previously reported, a legal suit has been brought against Myeni, aiming to have her declared a delinquent director. That case has been bolstered following the chairwoman's failure to have a compliance notice against her set aside. The notice stems back to the 2013 lease of ten Airbus (AIB, Toulouse Blagnac) aircraft; however, at the time, Myeni informed the Public Enterprises Minister that the airline was only leasing two aircraft. The Companies Tribunal found that Myeni did not comply with the law in regards to her duties as a director.
