National Treasury has approved a fresh transfer of funds to South African Airways (SAA), it said on Friday.

The money will come from the National Revenue Fund, Treasury said, and the transfer is intended to avert an imminent default on the beleaguered airline's R3bn CitiBank debt.

The bank had refused to grant an extension to the airline.

Treasury said in its announcement that a default “would have triggered a call on the guarantee exposure totalling R16.4bn, leading to an outflow from the NRF and possibly resulting in elevated perceptions of risk related to the rest of SAA's guaranteed debt”.

“Funds will also be used to assist SAA with its immediate working capital requirements‚” Treasury said.

South African Airways gets bail-out to repay CitiBank debt

“This payment was done in terms of section 16 of the Public Finance Management Act. This section of legislation states that the minister can authorise the use of funds to defray expenditure of an exceptional nature which is currently not provided for and which cannot‚ without serious prejudice to the public interest‚ be postponed to a future Parliamentary appropriation of funds. The due process laid out in the legislation will be followed.

“Given the nature of the problems at SAA‚ section 16 of the PFMA had to be used as the last resort.”

SAA has nearly R7bn in debt and was recently ordered to repay R1.9bn to CitiBank by September 30‚ just two months after receiving a state bail-out of R2.3bn to repay Standard Chartered Bank.

Last week SAA announced the appointment of its new CE‚ Vuyani Jarana‚ who takes up his position at the start of November on a five-year contract.

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