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South Africa’s National Treasury wants stringent conditions attached to the guarantees it provides for loans to the country’s struggling state airline, according to two people familiar with the matter.
Officials from the Treasury and the Department of Public Enterprises met on Saturday to discuss ways to restart South African Airways, said the people, who asked not to be identified because the talks are private. Representatives from two South African banks attended the talks, they said.
SAA halted operations and sought bankruptcy protection in December. Airline administrators say R10.5 billion ($ 613 million) is needed for the airline to resume operations.
Finance Minister Tito Mboweni is willing to provide guarantees of between 4 and 5 billion rand of that amount, subject to strict criteria, the people said.
It’s unclear where the funding would come from and there is no agreement on any bailouts yet, the people said. President Cyril Ramaphosa has backed the rescue of the airline, they said.
National Treasury spokesperson Mashudu Masutha-Rammutle and SAA spokesperson Tlali Tlali referred requests for comment to the DPE, whose spokesperson Sam Mkokeli did not immediately respond to a request for comment.
The carrier’s business rescue professionals did not immediately respond to a request for comment.
Capital partners
Treasury guarantees may encourage private lenders to provide financing to SAA, the people said. Any government funding can also help secure a future equity partner agreement, which is currently slated for the end of the year, the people said.
Twenty private sector donors, private equity investors and partners have submitted unsolicited expressions of interest in a restructured SAA, and those are being evaluated, the Department of Public Enterprises said.
Ethiopian Airlines Group is in talks with SAA to provide assistance, people familiar with the situation said. The Addis Ababa-based airline is seeking control, possibly in the form of a management contract, and that may be a sticking point, the people said.
Read: Mboweni has lost the battle with SAA, and now we face the consequences: analyst
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