Citibank Cancels Loan To South African Airways

January 11, 2016

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Citibank has cancelled a ZAR250 million rand (USD$15 million) loan facility to state-owned South African Airways, the latest blow to the cash-strapped airline.

"We are aware that Citi has cancelled a 250 million rand facility to SAA and are working closely with SAA on the issue to make sure there's sufficient liquidity. We are unable to comment further," Treasury spokeswoman Phumza Macanda said.

SAA's financial woes were part of a political storm in December when President Jacob Zuma axed former Finance Minister Nhlanhla Nene.

South African media reported that Nene was fired because of a clash he had with Dudu Myeni, SAA's chairwoman, over plans for a sale and leaseback arrangement via a third party with Airbus to purchase ten A320 aircraft.

After a market meltdown, Zuma abruptly reversed his decision to replace Nene with an unknown former mayor and brought Pravin Gordhan back to the finance post he had held from 2009 to 2014.

Gordhan promptly scrapped Myeni's plan, swapping the purchase of ten A320s for a lease of five Airbus A330-300s.

The Treasury said at the time that the lease transaction would improve the airline's financial position and that further measures would be taken this year.