South African Airways (SAA) is optimistic that it will be able to meet its loan obligations, this as the national carrier is due to pay back a lender R9 billion by the end of June.
In a statement on Monday, SAA acting Chief Executive Officer Musa Zwane said the carrier has been in contact with its lenders to renegotiate the management of its loans, which is a normal occurrence when loans become due and payable.
“The airline has government guarantees totalling R19.1 billion. By 30 June, R9 billion will be due and payable and only one lender has expressed a desire to have its loan paid back. We remain optimistic that the company will meet its loan obligations as these become due through negotiations with lenders and other initiatives,” said Zwane.
The acting Chief Executive Officer said engagements with lenders remain sensitive and confidential as it would be unwise to share salient details with third parties.
“The renegotiation of the terms of the loans are ongoing and SAA is optimistic that the airline will continue to operate, honour its obligations to its customers, suppliers and partners,” said Zwane.
This as SAA on Monday said it has made significant headway in putting together a comprehensive, as well as robust five year business plan aimed at addressing the carrier’s current and long term challenges.
The leadership of the airline said it is alive to liquidity and solvency challenges that face the business and has taken steps to ensure that the airline remains in business.
“SAA has a weak balance sheet, relies heavily on government guarantees to remain operational and has not been profitable in the last few years. The situation is not only undesirable but unsustainable and this led to the development of the turnaround plan that has been put in place.”
The carrier said the plan is anchored on five main pillars that identified areas on which the business must focus on as necessary interventions to set a foundation to lead to commercial sustainability.
The plan has a liquidity pillar which makes certain recommendations for implementation.
The work on the plan started in earnest in January 2017 and is overseen by the Board of Directors working together with executive management.
One of the international airline turnaround consultancies, Seabury Consulting, has been brought on board to assist the local teams in finalising and validating specific initiatives contained in the plan.
“The details of these initiatives will be announced once the plan has been approved by the shareholder,” said SAA.