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SAA delays AGM while awaiting state guarantee

The unprofitable state-owned carrier is working to meet conditions set by Finance Minister Nhlanhla Nene.
South African Airways delayed its annual general meeting scheduled for Friday while the unprofitable state-owned carrier works to meet conditions set by Finance Minister Nhlanhla Nene before he’ll consider the company’s request for a new credit guarantee.

SAA needs the guarantee, which it asked for in August, in order to sign off on its annual financial statements as a going concern, the Ministry of Finance said in a statement on Wednesday. SAA, which has been surviving on government-backed loans, including R6.5 billion ($470 million) of guarantees granted in January this year, has been working to reduce costs and become more efficient as it seeks to make a profit.

“Before the request could be considered, the Minister of Finance requested that SAA expedite the finalisation of a number of matters which could assist in improving the airline’s financial sustainability and reduce the amount of support required from government,” the Ministry said. SAA is “well advanced”’ with addressing most of the outstanding matters, according to the statement.

A process to appoint a permanent board at SAA has taken longer than expected, the Ministry said, meaning an interim board will remain in place. The airline is also seeking a permanent chief executive officer. Thuli Mpshe has held the job on an acting basis since July.

The National Treasury took responsibility for the airline’s turnaround after it was transferred from the Department of Public Enterprises in December.

©2015 Bloomberg News

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