Treasury assists SAA after it loses Citibank credit facility

Following its withdrawal from a R250 million Citibank credit facility, on which it depended for short-term funding, South African Airways (SAA), may be at risk of running out of cash this month. However, the South African National Treasury is working with SAA to ensure it has enough liquidity to continue operating, said Phuma Macanda, Treasury spokesperson.

The country’s national airline has been going through precarious financial difficulties of late and it appears that the situation was further complicated by the cancellation of SAA’s Citibank R250 million short-term banking facility on 24 December 2015. Reportedly, this left the airline without cash and may derail the process of  re-establishing a more favourable financial outcome.

According to a report, an SAA internal document shows that the airline will have no cash available from 15 January 2016. As a result, SAA is said to be trading under insolvent circumstances and Citibank is not prepared to reinstate the facility without a government guarantee. It was also said that the SAA board has received warnings over the past six months from executive management that the risk profile of SAA has been raised in the market due to excessive borrowing.
Cash flow projections also show that SAA squandered money over November 2015 and is still struggling to repatriate all foreign payments.  

SAA spokesperson, Tlali Tlali told Justmoney on Monday, that the airline would respond shortly to the reports.