S. African national carrier concludes swap transaction with Airbus

The South African Airways (SAA) will swap the purchase of 10 A320 aircraft for a lease of five A330-300 aircraft from Airbus, the National Treasury announced on Tuesday.

The swap transaction will mean that the SAA will no longer be required to pay additional pre-delivery payments (PDPs) to Airbus, which would have amounted to approximately 603 million rand (about 40 million U.S. dollars).

The announcement was made one day after the deadline for the pre-delivery payment was due on Monday.

The National Treasury said it has also been in direct contact with Airbus to ensure that all the required actions are executed smoothly to conclude the deal.

The implementation of the transaction is expected to improve the SAA's financial position by alleviating the cash flow pressure and improving its profitability, the National Treasury said.

Further measures will be taken next year to stabilize the airline which has been in financial quamire.

The National Treasury said it remains concerned that the SAA would not have the cash to honour its side, a situation that could have seen it default on its obligations, including its government guaranteed debt obligations.

In 2002, the SAA entered into a purchase agreement with Airbus to acquire 10 A320 aircraft. The agreement has proved financially onerous to the airline. In April 2015, the Board of SAA applied for approval from then Finance Minister Nhlanhla Nene, to cancel the purchase of the aircraft from Airbus and, instead, enter into an operating lease on five A330-300 aircraft with Airbus.

In July this year, Nene approved this request and negotiated a swap transaction through treasury to relieve the SAA from having to make the payments. Endit