JOHANNESBURG – The national treasury has confirmed that it will give South African Airways (SAA) a financial bailout to allow the airline to settle its R2.3-billion debt with Standard Chartered Bank.

In a media statement, Treasury said that the funds would be transferred from the National Revenue Fund to SAA in order to ensure the national carrier avoided defaulting on its payments. The payment was done “in terms of section 16 of the Public Finance Management Act.”

“A default by the airline would have triggered a call on the guarantee, leading to an outflow from the NRF and possibly resulting in elevated perceptions of risk related to the rest of SAA's guaranteed debt,” the statement read.

“Given the nature of the problems at SAA, Section 16 of the PFMA had to be used as the last resort. Government will do everything in its power to ensure that the airline's turnaround strategy is implemented.”

"The airline remains a strategic asset and in its role as the flag carrier, it serves as an economic enabler with direct and indirect benefits across a wide range of economic activity."