SAA gets lifeline, avoids default
Government has released funds for the National Revenue Fund to South African Airways to allow it to settle its debt with Standard Chartered Bank avoiding a default at the same time.
Treasury released a statement saying: "A default by the airline would have triggered a call on the guarantee, leading to an outflow from the NRF and possibly resulting in elevated perceptions of risk related to the rest of SAA's guaranteed debt."
The R2.2 billion loan matured on Friday.
Treasury says the bailout, which was done in terms of section 16 of the Public Finance Management Act, was a last resort.
"This section of legislation states that the Minister can authorise the use of funds to defray expenditure of an exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future Parliamentary appropriation of funds," reads the statement.
Treasury adds it will ensure the airline turnaround strategy is implemented and that an update on the recapitalisation of SAA will be announced during the Medium Term Budget Policy Statement in October.