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Fri Sep 30 15:30:00 SAST 2016

Low-flying SAA crashes into credit ceiling

BDlive | 12 January, 2016 07:32
An SAA Aircraft on the runway at the OR Tambo International Airport. File photo.
Image by: Gallo Images / The Times / Alon Skuy

SAA is at risk of running out of cash this month following the cancellation of a R250-million credit facility from Citibank last month on which the national airline depended for short-term funding.

SAA has both short-term and long-term financing difficulties, with R14-billion in funding required in the medium term to consolidate debt.

The news of the cancellation of the credit facility was confirmed by Treasury spokesman Phumza Macanda.

"We are working with SAA to ensure that they have sufficient liquidity."

Moneyweb said that an internal SAA document showed that the airline "will have no free cash available from January 15".

SAA's risk profile has been raised in the market, with the result that borrowing has become increasingly more expensive for the airline.

This is due, in part, to negative publicity over the company's internal ructions and the dismissal of some key executives.

In a memo to the board in November, Ursula Fikilepi, SAA's executive general manager for legal and risk, warned that, despite the fact that SAA still had R3-billion in government guarantees that could be utilised, the airline "is experiencing challenges in raising this funding as lenders are increasingly wary of assuming additional SAA risk".

Cash flow projections also show that SAA haemorrhaged money over November and was scrambling to repatriate all foreign payments as quickly as possible.

SAA spokesman Tlali Tlali said yesterday that the airline would respond shortly to the reports.

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