Cape Town - South African Airways (SAA) has now met its deadline of December 28 in order to finalise a swap deal with Airbus.
Airbus has received all it needs for the go-head of the swap deal, Airbus spokesperson Linden Birns told Fin24 on Monday.
He said what would have to happen next - probably early in the New Year - would be for representatives of Airbus to meet with counterparts at SAA in order to finalise specifications before the launch of production can begin.
"SAA has now done all that Treasury has instructed it to do regarding finalising the swap agreement and the next step would be to determine the specs," explained Birns.
He emphasised that the first plane in the swap deal would most likely be delivered during the later part of 2016.
In 2002 SAA entered into a purchase agreement with Airbus to acquire A320 aircraft. The first ten of the 20 A320s had been delivered and the delivery of the remaining ten aircraft was
expected to take place by 2017.
The amended transaction will now see SAA swap the purchase of the remaining ten A320 aircraft for a lease of five A330-300 aircraft from Airbus. The implementation of the deal in this manner will mean that SAA will no longer be required to pay additional pre-delivery payments to Airbus, which would have amounted to about R603m.
From an operational point of view, the A330-300s would be deployed to phase out the A340-600 wide body fleet, which was anticipated to result in cost savings, according to Treasury.
Then Finance Minister Nhlanhla Nene gave final confirmation of this swap deal in September 2015. Subsequently, SAA chairperson Dudu Myeni informed Nene that the board was reviewing the transaction structure with a view to amending it. Nene made it clear that any such amendment should leave SAA in a better financial position than would otherwise have been the case had the swap transaction gone ahead.
In November 2015, SAA asked Nene's approval to amend the structure of the original swap transaction that had been approved by him.
The transaction proposed entailed SAA purchasing the A330 aircraft and entering into a sale and leaseback of the aircraft with a local lessor so that the lease would be denominated in rand and not in dollar anymore.
In Treasury's review of the application, based on the indicative lease rates provided by SAA, both SAA and National Treasury’s assessment indicated that possible benefits may have been realised through entering into a rand lease. Treasury found, however, that there was considerable risk that no such arrangement would be in place by the time the contract with Airbus had to be concluded.
"A default would have severe negative consequences for SAA and could have spill-over consequences for the country as a whole. Specifically it would negatively impact on government’s capacity to deliver on its social and developmental objectives," Treasury said at the time.
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