Why Citibank pulled the plug on bankrupt SAA

Banks are feeling increasingly nervous about an implosion of bankrupt state-owned airline SAA with Citibank being the second bank to refuse to extend its loan to the sinking company, in this case R1.8bn.

In June, Standard Chartered Bank refused to roll over its loan of R2.2bn to SAA. The move required the Treasury to step in with an urgent bail-out to settle the debt because the unprofitable airline had run out of cash and was not generating enough income to cover its operating expenses.

SAA has had to reach repayment terms with suppliers owed R750m and will not be able to repay the R1.8bn it owes Citibank, which is due at the end of September. The Citibank loan is one of several totalling R6.8bn, which all become payable at the end of September.

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