South Africa's finmin approves cash-strapped national airline application

PUBLISHED: Mon, 12 Sep 2016 08:10:05 GMT
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South Africa’s Finance Minister Pravin Gordhan has conditionally approved an application from the cash-strapped national airline for a guarantee as a going concern, the ministry said on Friday.

South African Airways (SAA) has been surviving on state-guaranteed loans and has failed to submit financial statements for the past two years, with results for 2015/16 held back after the Treasury refused to grant it 5 billion rand ($346 million) in additional loan guarantees.

“SAA’s application for a going concern guarantee has been approved with conditions which include (that) the primary focus of the board must be to return the airline to financial sustainability,” a finance ministry statement released after Gordhan met SAA’s new board said.

It said funding must be secured to meet the airline’s liquidity requirements and that SAA should work with the National Treasury and the public enterprises department on the potential introduction of a strategic equity partner.

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The government last week reappointed Dudu Myeni, an ally of President Jacob Zuma, as SAA’s chairwoman, despite objections from the main opposition party which holds her responsible for the crisis at the airline.

On Wednesday Gordhan told parliament that he wanted SAA to become financially viable in five years’ time and to discontinue unprofitable routes.

($1 = 14.4400 rand)