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Safety belts on at SAA

Crisis-hit SAA has been granted an extension in submitting its audited financial statements in Hong Kong, a move that could allow it to continue flying there.

SAA spokesman Tlali Tlali said yesterday that Hong Kong’s registrar of companies had agreed to give the airline until September 30 to submit its financials.

“This has given us more room to resolve outstanding matters,” he said. SAA, which has not reported on its performance in two years, must get the Treasury to agree to a R5-billion government guarantee before auditors can finalise its annual financial statements.

The statements were due to be submitted to the registrar in Hong Kong by September 6. Failure to submit them on time would lead to SAA being deregistered there. The airline has been given a last-minute reprieve by the extension of the deadline to the end of next month.

Banks and other creditors have told SAA that there will be no more loans until its audited financial statements are published.

Refiners Shell have told SAA that it must now pay for jet fuel within 14 days; previously it had a 21-day account. The change indicates that Shell is nervous about SAA’s financial position.

Internal SAA documents show that the airline currently has R1.2-billion in its bank account, enough to see it through to October. But it cannot raise funds against the security of the R990-million it has remaining in guarantees.

It must pay R4.5-billion by the end of January on maturing bank loans. A senior government source said that if the banks were to continue lending to SAA they might have to answer to the Reserve Bank for reckless lending.

Tlali said yesterday that the airline had managed to convince Standard Bank to extend a loan of R250-million due today. Both Standard and Absa, as well as other banks, have made loans to SAA.

SAA is due to present its annual financial statements to parliament on September 15, after missing three deadlines this year alone.

If Finance Minister Pravin Gordhan, representing SAA’s shareholder – the state – were to ask for another deadline extension later than September the airline would have money with which to operate.

Treasury spokesman Phumza Macanda said the airline’s cash-flow projections indicated that it had sufficient funds to repay the loans maturing in September.

“The company has successfully extended the four [loan] facilities that matured during June and July. The Treasury continues to monitor SAA’s cash position,” she said.

Tlali said: “SAA is still able to pay its debts when they become due and payable.”

SAA board member Yakhe Kwinana resigned last week, citing the looming loan repayment deadlines as a reason. The Times has learned that she was nearly joined in leaving by acting CEO Musa Zwane, who asked to be released for health reasons.

Zwane, who is CEO of SAA Technical, told the board last week that the stress of the job could affect his health. He said yesterday that his resignation was on ice after a meeting with SAA chairman Dudu Myeni.

“We are hoping that [shortly] we will hear some good news from the Treasury and that it will be accompanied by the appointment of a [new SAA] board.”

Over the last nine years SAA has received over R14-billion in government guarantees, the last time in December 2014.