Durban – A memorandum to the board of South African Airways (SAA), penned by chairperson of the board Dudu Myeni, has lifted the lid on a R6bn swap deal between SAA and French aircraft manufacturer Airbus.
In the leaked document Myeni revealed details of the A320s/A330s swap proposal and the proposed dollar lease between SAA and Airbus.
Myeni also exposed that during the deal, there was a breakdown in communication between SAA management and members of the board.
According to Myeni’s letter, SAA met with representatives from Airbus twice, in September and in October. She said when her team returned, a decision was taken that the dollar lease proposal was prejudicial to SAA.
“Our view is that the SAA executives led by the chief financial officer (CFO) did not negotiate the best deal for SAA… and that this hugely inefficient dollar lease proposal be rejected by SAA.”
Myeni said recommendations were made during one of the meetings that SAA should instead inform Airbus to replace the dollar lease with a rand denominated lease with an African leasing entity as the lessor of the five A330 aircrafts.
South African institutions come on board to help SAA to underwrite the R60bn required to acquire the five A330s from Airbus.
Alternatively Myeni said, should Airbus not be willing to consider the board's position, an African aircraft leasing company should arrange funding for an outright acquisition of the five A330s from Airbus and for these to be leased to SAA with a rand denomination.
“…Whatever dispensations offered by Airbus under the A320s/A330s swap, and the dollar lease, would pass on to the substitute transaction.
“So the benefit of the $106m, and the waiver of the $20m penalties, among others, would be passed on by Airbus, and be equally enjoyed under the substitute transaction.”
She also questioned Airbus’s conduct.
“At the Airbus meeting, the Airbus representative agreed to the above… and promised to issue a letter to reflect the above agreement. In this regard we have received and perused a letter from the Airbus representative, dated October 14 2015.
“Our view is that the Airbus letter does not accurately reflect the party’s agreement. We could list all these inaccuracies and attempt to rectify them in responding correspondence to the Airbus representative.
"However, rather than remedy the inaccuracies in the Airbus letter through further correspondence, at the risk of to - and - fro correspondence, and thus muddy the agreed issues even further, we suggest that a follow up meeting among the parties be held at the parties' early convenience.”