Finance Minister Malusi Gigaba is leading negotiations with some South African Airways (SAA) lenders in an attempt to postpone the repayment of loans due in September.

SAA had to find an additional R6.9bn to settle these loans‚ the airline’s chief financial officer‚ Phumeza Nhantsi‚ told MPs on Friday. The loans were due for settlement in July‚ but the airline managed to convince most of the lenders to defer the payment to end September.

SAA execs to take a pay cut as liquidity crisis hits

Standard Chartered Bank was the only lender that demanded immediate settlement‚ forcing the finance minister to raid the National Revenue Fund to settle the R2.2bn liability. Had SAA defaulted on this loan‚ it would have triggered a call on the R19.1bn government guarantee of the airline’s debt.

SAA is operating on the basis of this guarantee as it has effectively been bankrupt for a while. The airline is facing a liquidity crisis and is not generating enough cash to cover its costs.

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