SAA deadline to settle its R1.8 billion debt to Citibank nears

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The deadline is looming for South African Airways (SAA) to settle its R1.8 billion debt to Citibank.

The national carrier has until Saturday to settle the debt and there is no sign that the United States-based bank will give another reprieve.

The National Treasury is currently in consultation with Citibank on how SAA is going to settle the money it owes.

Finance Minister Malusi Gigaba dismissed reports recently that Treasury might dip into Public Investment Corporation funds to help rescue the ailing airline.

The Telkom deal which would enable government to sell some of its R2 billion rand stake in it, remains on the table.

Analysts say SAA must be restructured as it is not commercially viable.

Transport Economist Joachim Vermooten says, “SAA would have to be restructured and the probability is that it can only be done under the principle of business rescue. It needs to operate on a commercial basis for it to be sustainable.”

The airline recorded a loss of R4.5 billion in the 2016/17 financial year.

SAA was given R2.3 billion by the state in order to settle its debt with Standard Chartered in July.

The national carrier owes its creditors a total debt of R6.9 billion.

Over the years, SAA has received Government guarantees to stay afloat and analysts say this is not sustainable.

The rating agencies have also raised concerns about SAA’s inability to meet its financial obligations.

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