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SAA secures R550m bailout

Jan 06 2013 11:52 Sapa

SAA plane

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 Johannesburg - South African Airways received an emergency loan to cover fuel costs, preventing the grounding of its local and international flights, according to a report on Sunday.

Finance minister Pravin Gordhan and public enterprises Minister Malusi Gigaba last week signed off a guarantee that allowed the national carrier to secure a R550m bank "facility" for fuel and other short term commitments, the Sunday Times reported.

The loan has to be repaid over the next three months.

The grounding of the airline would have left scores of local and overseas passengers stranded after the festive season holidays.

Gigaba's spokesperson Mayihlome Tshwete told the newspaper there was nothing unique about the loan and that airlines all over the world had experienced financial challenges.

"This was in fact foreseen by SAA when it previously requested a R5bn guarantee. As management, we would not expose the airline to the possibility of being grounded at any time."

SAA's fuel contracts were under review, chief executive officer Vuyisile Kona told the Sunday Times.

The airline, as the country's biggest buyer of fuel, was not getting the best deal, he said.

"I am not happy with the pricing. In fact, I am getting the best deals overseas."

Emergency measures were being put in place to curb crippling losses across some of the airline's subsidiaries.

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