S. African Airways gets additional state guarantee

The National Treasury announced on Thursday that it has approved an additional guarantee of 6.488 billion rand (about 560 million US dollars) to the South African Airways (SAA) to bail out the cash-strapped airline.

This brought to 14.4 billion rand (about 1.24 billion dollars) the total guarantees granted to the SAA.

"The additional guarantee will enable SAA to finalise its annual financial statements for 2013/14, making it possible for the airline to hold its annual general meeting (AGM) on Friday next week," the Treasury said in a statement.

As conditioned by the guarantee, the state-run SAA is to provide the Treasury within one month with a comprehensive implementation plan for the 90-day action plan interventions, including timelines for the targeted savings and which managers are responsible for delivering those savings.

The airline will have to review and stress testing jointly by the government and SAA of the financial model and refined long- term turnaround strategy, and to develop proposals within three months on the network structure, fleet strategy and structure of the airline for government's consideration.

The SAA is also required to identify within three months areas where it can cut operating costs and how those cuts will be achieved.

In a joint media statement, the finance minister, the SAA board, the acting CEO, and the CFO said they have agreed to implement the long term strategy with speed so as to stabilise the company's financial position.

The SAA is one of the state-owned companies singled out by President Jacob Zuma to be regenerated under a turnaround plan. The other two are the electricity utility Eskom and the South African Postal Office. Endi