SAA signs 1.5bn rand loans with two banks

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South African Airways (SAA) has signed a 1.5 billion rand ($160 million) revolving overdraft type facility with two local banks, according to a source.

Rand Merchant Bank and Investec will be jointly providing the struggling flag carrier with the overdraft type facility which each bank underwriting 50%.

The facility is guaranteed by the Department of Public Enterprises, which is owned by the Government of South Africa. The funds will be used as working capital.

Last October, the South African government granted the carrier a 5 billion rand guarantee for a period of two years.

Last month SAA submitted its long-term turnaround strategy to the Department of Public Enterprises. The turnaround strategy is aimed at improving the airline's financial sustainability and operational efficiency.

There will be a three-phase implementation with continuous, cyclical monitoring over a 20-year period. SAA says there will be specific and measurable outcomes in each of the three phases, described as short, medium and long-term.