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Home » South African Airways » South African Airways Debt: “It might just be that we don’t have to pay…”
South African Airways

South African Airways Debt: “It might just be that we don’t have to pay…”

Matthew September 26, 2017 5 Comments

South African Airways (SAA) remains on life support thanks to loans from the government of South Africa. This is not news and it likely not going to change. But now the South African government is facing issues paying off its SAA-related debt.

I suppose we should be thankful that the South African government did not just print the 1.8 billion Rands ($135million) needed to sustain SAA over the last few months, but the government also did not have that money lying around. Instead, it had to borrow the money from lenders like Citibank at an interest rate not disclosed. And it wasn’t just the 1.8 billion Rands. To date, the government owes  creditors billions of additional Rand.

6.9 billion Rands ($516million) is due at the end of September and now Treasury Director General Dondo Mogajane is “in talks with Citibank on how to settle” the debt.

We owe Citibank about 1.8 billion rand. We had an understanding with them to roll (the debt) to September. Citi did indicate to us that they will not be in a position to roll further and we engaged them. It’s an ongoing consultation.

And as for the other creditors?

We are engaging the lenders, so as much as 6.9 billion rand is due on paper it might just be that we don’t have to pay the 6.9 billion, consultations continue.

It’s a difficult situation, isn’t it? South African Airways cannot seem to make money and continues to drag down the entire South African government (in terms of bond ratings / credibility). Now the government has even talked of tapping the government pension funds to keep SAA afloat.

CONCLUSION

Keep an eye out on South African Airways. Like Alitalia and other inefficient state-backed carriers I expect it to grown for reasons of prestige and the multiplier effect of SAA in the greater South African economy. But it’s dragging the country down, month after month, year after year.

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About Author

Matthew

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 120 countries over the last decade. Working both in the aviation industry and as a travel consultant, Matthew has been featured in the New York Times, Chicago Tribune, Wall Street Journal, USA Today, BBC, Fox News, CNN, ABC, CBS, NBC, Al Jazeera, Toronto Star, and on NPR. Studying international relations, American government, and later obtaining a law degree, Matthew has a plethora of knowledge outside the travel industry that leads to a unique writing perspective. He has served in the United States Air Force, on Capitol Hill, and in the White House. His Live and Let's Fly blog shares the latest news in the airline industry, commentary on frequent flyer programs and promotions, and detailed reports of his worldwide travel. His writings on penandpassport.com offer more general musings on life from the eyes of a frequent traveler. He also founded awardexpert.com, a highly-personalized consulting service that aids clients in the effective use of their credit card points and frequent flyer miles. Clients range from retirees seeking to carefully use their nest egg of points to multinational corporations entrusting Matthew with the direction and coordination of company travel.

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5 Comments

  1. Nick Reply
    September 26, 2017 at 3:10 pm

    This airline desperately needs to go bankrupt and get restructured to become an efficient modern entity. But thats not going to happen in the corrupt environment, so perhaps it would be better everyone if it just went the way of Air Berlin.

  2. Gary Leff Reply
    September 26, 2017 at 4:03 pm

    Remember that this is the airline that even Etihad refused to invest in !

    • Matthew Reply
      September 26, 2017 at 6:27 pm

      That hurts!

  3. No Name Reply
    September 27, 2017 at 7:36 am

    South Africa=Zimbabwe ver. 2.0 coming up?

  4. Pingback: American Express Launching Its Hong Kong Lounge and Delta Offering Free Inflight Texting - View from the Wing

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