August 30, 2017 / 6:41 AM / 2 years ago

South Africa pushes Angola to pay debt owed to airline SAA

CAPE TOWN (Reuters) - South Africa will press the newly-elected Angolan government to pay 850 million rand ($66 million) it owes struggling South African Airways (SAA), the finance minister said on Tuesday.

South Africa's Finance Minister Malusi Gigaba looks on as he speaks during the Thomson Reuters economist of the year awards in Sandton, South Africa July 13, 2017. REUTERS/Siphiwe Sibeko

The airline runs one of Africa’s biggest fleets but is loss-making. SAA is owed a total of some 1 billion rand in revenue earned in other African countries, with Angola the single largest debtor, a treasury document showed.

Finance Minister Malusi Gigaba said the treasury was talking to Angola and other African governments that owe the airline to get the funds repatriated.

“We understand that Angola is facing its own difficulties economically, but so are we and many other countries, so we expect they will continue to honor the agreements ...and pay the money due to us,” Gigaba told Reuters in Cape Town.

In a bid to keep its planes flying, SAA is seeking a 10 billion rand bailout from the treasury.

The finance ministry and central bank in Luanda did not immediately respond to requests for comment.

Angola held national elections last week won by the ruling MPLA party, according to a provisional tally of results that the two main opposition parties have rejected.

Hit by a collapse in the price of crude oil, Angola - Africa’s second-biggest oil exporter - has been depleting its foreign reserves to fund imports and pay down government debt, and imposed capital restrictions including on amounts travellers can take abroad.

In July, Emirates airline scaled back its five weekly flights to Luanda to three due to difficulties in repatriating revenue and cancelled a management contract with Angolan national carrier Taag.

SAA’s spokesman Tlali Tlali said it was not contemplating a similar move.

According to the global airline industry body IATA, Angola was the only one of the top five countries blocking fund repatriation to have seen the amounts it owes increasing - to $477 million from $237 mln in June 2016.

IATA spokeswoman, Katherine Kaczynska said the global organisation was seeking ways to get the outstanding funds released.

($1 = 12.9752 rand)

Additional reporting by Stephen Eisenhammer in Luanda; Editing by James Macharia and John Stonestreet

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