The South African Government today announced that it would guarantee USD$600 million in loans for troubled state airline South African Airways (SA) over the next two years. The news comes as dust from last week's mass boardroom resignation settles, with 8 new board-members having been appointed, in addition to a new chairman.
The South African government's Department of Public Enterprises (DPE), under which South African Airways falls, said in a statement this afternoon:
"The guarantee will enable SAA to borrow from the financial markets, thus ensuring that the airline continues to operate as a going concern," it said.
|Malusi Gigaba (News24)|
The loans, however, will come with stringent conditions, namely: that SAA's new board must develop a turnaround strategy to be approved by both the South African Minister of Public Enterprises Malusi Gigaba, and the Minister of Finance, Parvin Gordhan, and that SAA will also have to provide the Department of Public Enterprises (DPE) and the Minister of Finance with its proposed financing strategy for its planned purchase of short and long haul fleet.
If and when a suitable turnaround strategy is agreed to, a technical committee comprising representatives from the National Treasury and DPE will then be appointed to monitor SAA’s financial position as well as progress in developing and implementing the turnaround strategy.
Disagreements last week during a presentation on the carrier's long term goals and strategy needed to secure the loans granted today, formed the crux of the matter that ultimately led to the boardroom debacle of last week.