SA Airways expects to pay a penalty of more than R1.5 billion for cancelling a contract with Airbus for 15 aircraft, acting chief executive Chris Smyth told MPs on Wednesday.

Smyth said the national carrier ordered a fleet of A320 planes from the European aircraft maker, but then cancelled because it discovered that it did not need them at the moment.

However, the cancellation was not properly registered and SAA therefore faced a steep cancellation fee as well as pre-delivery payments.

"It will be as high as R1.5 billion," he told Parliament’s portfolio committee on public enterprises.

Smyth said SAA and Airbus were negotiating to resolve the issue.

"The negotiators are very confident that they will resolve this matter in a way that is satisfactory for both parties," he said.

Smyth said the airline’s turnaround strategy had pulled it out of the red, resulting in a billion-rand operating profit for this year.

"SAA has pulled itself around from where it was last year," he said.

"We have a sustainable future purely because of the fact that we have a successful restructuring. It is very clear we would not be here if we had not had this restructuring."

The government had repeatedly injected cash into SAA to keep the troubled national carrier afloat, with the former finance minister allocating it a further R1.6 billion in February to support its turnaround strategy.

But Smyth added that "recapitalisation remains a problem for us" and said on top of the Airbus penalty it would have to pay another R1 billion in hedging costs due to fluctuating fuel costs.

SAPA