STATE-owned South African Airways is to receive ZAR5 billion (US$350 million) from the National Treasury to help repay debt, however, the carrier will have to engage with creditors to restructure debt double that amount
STATE-owned South African Airways is to receive ZAR5 billion (US$350 million) from the National Treasury to help repay debt, however, the carrier will have to engage with creditors to restructure debt double that amount. The carrier has ZAR14.2 billion of repayments due by March, the Treasury said in its mid-term budget. The company 'is not generating sufficient cash to repay its total debt and will have to negotiate with lenders to refinance or extend maturity dates,'' Bloomberg reports.
The carrier is one of 'several' state-owned companies that will struggle to refinance or redeem debt without government assistance at a time when it is becoming harder to access to credit owing to weak balance sheets, poor governance and liquidity challenges, the treasury said. Contingent liabilities due to government guarantees for debt of state companies is a major risk to the fiscal path, it said.
State-owned firms have a combined debt load of ZAR1.6 trillion, of which ZAR670 billion is guaranteed by the government, according to the budget review. Debt redemptions by the 10 biggest borrowers will average ZAR66 billion annually in the next two fiscal years, exceeding government repayments due over the same period.
Assistance to other state institutions announced in the budget review includes a ZAR5.8 billion allocation to the South African National Roads Authority to help repay debt due over the next three years and ZAR1.2 billion to South African Express Airways.
