Treasury keeps tabs on SAA's use of guarantee

Adrian Pingstone via Wikimedia Commons

The Treasury is considering another request for a guarantee that the airline made in August. SAA argues it again needs a guarantee to finalise its results as a going concern. The national airline's previous statements were released nearly a year after financial year-end due to SAA not being a going concern.

The Treasury granted SAA a R6.5bn government guarantee in February with specific conditions, including the airline's board having to submit weekly reports to the Treasury. At the time, the Treasury said the reports were to be on "cash utilisation, cash position and daily cash forecasts".

Last year, President Jacob Zuma removed the Department of Public Enterprises' authority over the airline, placing it under the jurisdiction of the Treasury because SAA's problems were more of a financial nature than aviation. A total of R14.5bn in guarantees have been granted to SAA in recent years.

The Treasury would not disclose the amount that SAA requested in its latest guarantee application as it was not Treasury "practice to provide details of requests that are still under consideration". SAA said it could not respond to questions regarding its application for another government guarantee.

The national carrier was submitting weekly, monthly and quarterly reports that were used to monitor financial performance, Treasury said. "Progress has been noted in a number of key areas and, where obstacles have been encountered, SAA has been required to outline the remedial measures that they will take to get the initiatives back on track," said Treasury. "These reports are used as a tool to monitor financial performance. Improvements in financial performance are dependent on the implementation of the turnaround initiatives."

Source: Business Day