Government guarantees granted to SAA
SAA GUARANTEES |
Date issued |
Amount (R' Million) |
Going Concern Guarantee |
March 2007 |
1 300 |
Going Concern Guarantee |
September 2009 |
1 600 |
Going Concern Guarantee |
July 2012 |
5 006 |
Going Concern Guarantee |
December 2014 |
6 488 |
Going Concern Guarantee |
September 2016 |
4 720 |
Total Guarantees issued |
|
19 114 |
SAA has been granted several guarantees since being unbundled out of the Transnet Group in 2007. All the guaranteed issued to SAA were for the granted to allow the airline to meet the going concern requirements for signing off the airline’s financial statements. Total guarantees granted from 2007 to date amount to R19.1 billion.
Due to the poor financial performance and deteriorating solvency position of the airline, SAA could not raise debt funding on the strength of its balance sheet. Local and international lenders thus required any funding provided to SAA to be backed by a sovereign guarantee. Each of the guarantees provided to SAA was based on business plans which forecasted that the airline would attain financial sustainability and be able to settle its debts from internally generated funds.
Government guaranteedobligations settled through recapitalisations from government
Since June 2017, R26.4 billion of the recapitalisations that government provided to SAA have been made to settle the airline’s government guaranteed obligations. This includes R10.3 billion of the R16.4 billion announced in the February 2020 budget that will be provided to SAA over the 2020 Medium Term Expenditure Framework (MTEF) for the settlement of government guaranteed obligations but excludes the R10.5 billion for business rescue implementation announced in the 2020 Medium Term Budget Policy Statement (MTBPS).
Historically, once SAA’s guaranteed obligations have been settled, the airline had used its freed-up guarantee facility to raise additional government guaranteed debt. Conditions have been put in place to reduce this risk to the fiscus.