SAA gets R5 billion from government

The National Treasury allocated 5 billion rand to help South African Airways to repay debt, but said the state-owned airline will have to engage with creditors to restructure almost double that amount.

SAA has 14.2 billion rand of repayments due by March, the Treasury said in its mid-term budget statement Wednesday. The company “is not generating sufficient cash to repay its total debt, and will have to negotiate with lenders to refinance or extend maturity dates,’’ it said.

The carrier is one of “several” state-owned companies that will struggle to refinance or redeem debt without government assistance at a time when access to credit is becoming more difficult due to weak balance sheets, poor governance and liquidity challenges, the Treasury said. Contingent liabilities due to government guarantees for debt of state companies is a major risk to the fiscal path, it said.

State-owned firms have a combined debt load of 1.6 trillion rand, of which 670 billion rand is guaranteed by the government, according to the budget review. Debt redemptions by the 10 biggest borrowers will average 66 billion rand annually in the next two fiscal years, more than government repayments due over the same period.

Assistance to other state institutions announced in the budget review includes:

  • A 5.8 billion rand allocation to the South African National Roads Authority to help repay debt due over the next three years
  • 2.9 billion rand to the South African Post Office
  • 1.2 billion rand to South African Express Airways

These allocations will be paid from a contingency reserve and unspent funds from other government departments, the Treasury said.

Now read: It took the SA Post Office 81 days to deliver a letter, which should take only 3 days

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SAA gets R5 billion from government