SAA receives additional R6.48 billion guarantee - CNBC Africa

SAA receives additional R6.48 billion guarantee

Southern Africa

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SAA receives another R6.48 billion guarantee. PHOTO: Wikipeda

Total guarantees to the airline are currently at around 14.4 billion rand.

The guarantee is not a transfer of money but an undertaking that the government will take on the liability of the entity’s debt obligation, in the event of a default.

The Ministry of Finance believes that the additional guarantee will enable SAA to finalise its annual financial statements for the 2013/14 financial year. This will also make it possible for the airline to hold its annual general meeting (AGM) on Friday, 30 January 2015.

(READ MORE: No interviews on SAA at the moment - finance ministry)

“At the conclusion of the AGM, the minister of finance and the airline management will brief the media. The venue and time for the media briefing will be announced closer to the day,” the ministry said in a statement.  

As part of the conditions of the guarantee, SAA has to provide National Treasury with a comprehensive implementation plan for the 90-day action plan interventions, including timelines for targeted savings.

SAA also has to develop proposals on the fleet strategy and airline structure as well as identify areas where operating costs can be cut down, and how those cuts will be achieved.

“As stated in the media statement issued on the 22 December 2014, the minister, the board, the acting chief executive officer, and the chief financial officer have agreed that to stabilise the company’s financial position, elements of the long term strategy must be implemented with speed even as the board continues to refine and update the strategy,” said the ministry.

(WATCH VIDEO: SAA outlines 90 day action plan )

“In addition, short term and medium-term milestones have been identified and will form part of the shareholder compact that the minister of finance will sign with the board.”

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