By Lehlohonolo Lehana.
South African Airways (SAA) has secured a fresh R1 billion state guarantee as rising aviation fuel costs squeeze cash reserves across domestic and regional routes.
The intervention arrives as government races to conclude a strategic equity partnership, aiming to halt the drain on public finances after committing roughly R50 billion to restructure the state-owned carrier.
National Treasury Director-General Duncan Pieterse stressed ahead of the Medium-Term Budget Policy Statement (MTBPS) speech on Wednesday that the R1 billion was not an allocation but was in the form a guarantee after the airline’s fiscal exposure increased.
He was unable to rule out any further bailouts to the airline in the future.
Pieterse said Treasury is working with the Department of Transport around a transaction to identify a strategic partner for SAA.
“We are waiting for that transaction advisory work to continue and to be concluded and once that is done, only then will we know whether there are any fiscal outlays associated with that.”
SAA has already received around R50 billion in bailouts over the years and so the reason the strategic equity partner becomes important is so that we can permanently mitigate against that fiscal risk,” said Pieterse.
The MTBPS said SAA has about R223 million in government guarantees related to unflown-ticket liabilities and letters of credit.
“The residual risk depends on its ability to absorb these pressures and meet its operating and financing requirements without additional government support.”
The MTBPS said the financial position of other major state-owned companies and public entities remains a source of fiscal risk.
The mid-term budget statement noted that utilised guarantees by state-owned companies declined by R46.1 billion – mainly reflecting a R43.4 billion reduction in Eskom’s exposure following transfers to the power utility in terms of the Eskom debt-relief arrangement and the settlement of a R38 billion bond.