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Treasury working with SAA as Citigroup ends credit facility

Jan 12 2016 09:11
Rene Vollgraaff

Johannesburg - Treasury is working with South African Airways (SAA) to ensure the company has enough liquidity to continue operating after Citigroup cancelled a short-term credit facility.

SAA will issue a statement on Tuesday that explains the impact of the cancellation, SAA spokesperson Tlali Tlali said on Monday.

Treasury spokesperson Phumza Macanda confirmed that the government was working with the airline earlier on Monday by phone.

“We confirm that Citibank has withdrawn SAA’s credit facility,” Tlali said. “We will issue a statement on Tuesday in response to this development and to enable everyone to understand what this means for SAA from a cash flow point of view.”

Citigroup on December 24 cancelled a R250m facility for SAA, leaving the airline without cash, Johannesburg-based Moneyweb reported, citing an internal document of the national carrier. The lender won’t reinstate the facility without a government guarantee, the website said.

SAA, which is cutting costs to ease a dependence on state-guaranteed loans, accepted last month an instruction to lease five wide-body planes from Airbus, abandoning an alternative plan by chairperson Dudu Myeni and avoiding a $40m (R674m) payment that threatened its financial stability.

The carrier was instructed by Finance Minister Pravin Gordhan to proceed with the deal to lease A330-300s in line with a decision made by one of his predecessors, Nhlanhla Nene, who was fired by President Jacob Zuma on December 9.

The transaction was opposed by Myeni, who wanted the planes sold to a third party in South Africa that would then lease them to the airline.

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airbus  |  saa  |  citigroup  |  airbus swap deal

 
 
 
 

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