R10bn bailout for a ‘colossal drag on the fiscus’: Is it time for a debate on SAA?

SAA
SAA

It’s already been given R23 billion.

And a secret plan involving the sale of Telkom shares to give South African Airways another R10 billion has the Democratic Alliance questioning the importance of the airline and calling for a debate to be held on the financial position of the national carrier.

On Wednesday, it was revealed in Parliament by DA finance spokesperson Alf Lees that the government had secret plans to sell 39.75% worth of shares in state-owned enterprise Telkom, in order to raise a staggering R10 billion in bailout money for the airline.

Since 2008, the airline has received R23.3 billion in bailouts and guarantees.

When the DA made the revelation about the R10 billion bailout, Finance Minister Malusi Gigaba slammed the party, saying that it had “blown the negotiations”.

Lees responded, saying that Gigaba was “horribly mistaken”.

“The Standard Chartered Bank demanded payment from SAA in June this year and this no doubt caused other banks to demand payment,” Lees said.

Standard and Chartered refused to roll over its R2.2 billion loan to SAA two months ago.

Lees has called for Gigaba to put SAA into business rescue.

“SAA is a colossal drag on the fiscus and highlights the drain that state-owned enterprises (SOEs) present to our country, with a staggering R780 billion in guarantees already extended to SOEs. This debate of national importance on the ticking time bomb that is SAA is more imperative now than ever before,” Lees said today.

“We hope that the debate will take place as soon as possible. Our chief whip will be putting it forward this week and then we’ll take it from there,” Lees told City Press.

Last week it was reported that in a desperate bid to cut costs, SAA would be canning some of its routes and getting rid of at least 10 of the 50 airplanes in its fleet.

A source had told City Press’ sister newspaper Rapport that the changes would not matter as long as “Dudu Myeni remains involved. She has a destructive influence on the airline and the staff”.

Myeni has served as the SAA board chairperson since 2015. Her term ends this month.

In June, Myeni appeared before the Companies Tribunal after she was issued with a non-compliance notice by the Companies and Intellectual Property Commission for allegedly lying to the government about an Airbus deal.

Criticism towards Myeni escalated when she was publicly criticised for missing board meetings.

To add to the problems which SAA faces, it has been without a CEO for two years now.

“SAA has not had a permanent CEO for more than two years and has run at massive losses amounting to R6.1 billion during that period. It is critical that a permanent CEO be put in place to take control and implement robust cost-cutting and revenue improvement measures,” Lees said today.

Vuyani Jarana, group executive at Vodacom, was announced to take over the reins as SAA’s CEO by Gigaba, but his appointment was yet to be finalised following an alleged dispute over the signing of his contract.

When City Press contacted SAA for commentary regarding Jarana and his appointment, spokesperson Tlali Tlali could not confirm if the contract was signed.

“I am completely unaware about any of this. I don’t know who else you can speak to but I can’t confirm anything,” he said.

Lees told City Press that if Jarana hadn’t officially signed, then “I put it to you that we have been misled. Has he even accepted the offer?” Lees asked.

“The CEO’s appointment is important because if the CEO is not appointed, this could result in a default that would require all remaining R14.6 billion of bank loans to be repaid immediately,” Lees said today, telling City Press that the situation with the carrier is a “crisis”.

“We want to know where the money is going to come from to fund SAA. Is there another way to fund the airline without selling shares in SOEs? This is why we want the debate. Let’s all get involved in the input of the airline,” Lees said.

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