STANDSTILL: Finance Minister Pravin Gordhan. Picture: TREVOR SAMSON
Pravin Gordhan. Picture: TREVOR SAMSON

THE Treasury has taken steps to ensure that South African Airways’ (SAA’s) creditors do not pull the plug on the embattled airline, which is experiencing a severe cash crunch.

Despite its financially precarious position, the government will not allow SAA to sink. Finance Minister Pravin Gordhan insisted on Wednesday that “SAA is open for business and will remain so”.

Treasury added that it was considering SAA’s application for another guarantee.

The application is for about R5bn, bringing the total to R20bn. It has also repatriated funds from SAA’s foreign bank accounts so it can pay bills. SAA had about R870m in these accounts at the end of each of the four financial years up to March 2014.

Last week, Moneyweb quoted from an SAA document saying that it “will have no free cash available from January 15”. Its monthly salary bill alone is about R400m.

The Treasury said it would try to secure short-term bridging facilities on the basis of the R2bn remaining of its R14.4bn state guarantee.

It said it had also been in contact with several lenders that had provided SAA with short-term loans on an un-guaranteed basis.

“Indications are that the banks are not intending to withdraw their facilities at this time,” the Treasury said.

Its engagement with creditors is significant considering a November management memorandum to the board, which noted that even government-guaranteed funding had become more difficult to raise, “as lenders are increasingly wary of assuming additional SAA risk”.

Concerns by SAA’s creditors have been mounting. Last month, Citibank cancelled SAA’s R250m unsecured credit facility and last year both it and Standard Bank extended SAA loans for one year only because of risk concerns.

Meanwhile, the Hawks have been given the go-ahead to investigate alleged theft‚ fraud and corruption and the irregular closure of SAA routes to Senegal‚ India and Beijing.

Hawks head Lt-Gen Mthandazo Ntlemeza said allegations of sabotage and the irregular use of private investigators to spy and obtain confidential data to undermine operations and passenger safety would be probed.