(Bloomberg) -- South Africa's National Treasury has transferred funds to South African Airways to help the state-owned airline avoid default on its debt to Standard Chartered Plc., according to a statement from the department on Saturday.
“Government has decided to transfer funds from the National Revenue Fund to South African Airways to allow the airline to pay back its debt to Standard Chartered Bank thereby avoiding a default,” the National Treasury said. “Improving the financial positions of the airline through recapitalization has been on government's agenda for a while, as outlined in the February 2017 budget.”
The debt-laden airline has 16.7 billion rand ($1.3 billion) of loans, most of it held by Standard Chartered, Standard Bank Group Ltd., Citigroup Inc., Nedbank Group Ltd., Absa Bank Ltd. and Rand Merchant Bank, according to a document handed to lawmakers on June 27. The carrier has 19.1 billion rand in state guarantees, a safety net that is effectively keeping SAA solvent after six consecutive unprofitable years.
The National Treasury also said it will work to ensure the airline's turnaround strategy is implemented, adding that several options are being explored to improve its financial position and that an update will be provided during the Medium Term Budget Policy Statement in October 2017.
To contact the reporter on this story: Amogelang Mbatha in Johannesburg at ambatha@bloomberg.net.
To contact the editors responsible for this story: Karl Maier at kmaier2@bloomberg.net, Chris Malpass, Andrew Blackman
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