South African Airways May Test State Guarantees, Opposition Says

JOHANNESBURG (Capital Markets in Africa) – South African Airways, the country’s state-owned airline, may be close to calling in 19.1 billion rand ($1.5 billion) in government debt guarantees after missing loan repayment dates, according to the Democratic Alliance, an opposition political party.

The airline, which hasn’t made a profit since 2011, has 8.9 billion rand of debt payable in the 2018 fiscal year, the DA said, citing data from parliament’s Standing Committee on Finance. SAA has been relying on the existence of state guarantees to continue operations as the government considers ways to turn the carrier around.

Standard Chartered Plc refused a request by SAA to extend a loan facility, the Johannesburg-based Sunday Times reported, citing people it didn’t identify. SAA owes the bank 2.3 billion rand, the newspaper said.

“If SAA has failed to repay some of these loans, it could force other creditors to recall their loans, which would then necessitate the government to step in and pay,” the DA said in a statement. “This money would ultimately be taken from the public purse and could have dire consequences for the sovereign rating status of South Africa.”

Spokespeople for SAA and Standard Chartered didn’t respond to requests for comment.