Development Bank's R3.5bn bailout of SAA may be depleted by early March - Gordhan

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Minister of Public Enterprises Pravin Gordhan has said that the R3.5bn in emergency funding that SAA received from the state-owned Development Bank of Southern Africa earlier in the year may be depleted by early March.

Gordhan was addressing a joint sitting of Parliament's Standing Committee on Public Accounts and Parliament's Portfolio Committee on Public Enterprises on Wednesday morning, where he stressed that the need to provide financial assistance to the beleaguered flag carrier would be a reality until the business rescue process is finalised. 

The admission from Gordhan regarding the bailout money came in response to questions from SCOPA member Alf Lees. While the minister talked about the importance of the provision of finance, he did not make any definitive announcements about emergency funding. 

SAA was placed under voluntary business rescue in December, and received R3.5bn of emergency funding from the DBSA in early January. Earlier this month its business rescue practitioners, Siviwe Dongwana and Les Matuson, made the decision to cancel all the airline's domestic routes except for the popular Johannesburg-Cape Town flight to save cash. Some regional and international flights were also cancelled. Their business rescue plan is expected to be finalised by the end of the February. 

Dongwana and Matuson attended the joint sitting on Wednesday along with other members of the business rescue team and officials from the Department of Public Enterprises, but Gordhan took the lead in updating Parliament. 

Asked whether a private partner could be brought into the fold, Gordhan said while details were still being determined, the airline needed "the right kind of combination" between public and private ownership. 

"Nobody is going to offer you anything for SAA now. You could pick it up for R1. You would probably have to pay someone to come in and take SAA off our hands," said Gordhan.

The minister, who had a touch of laryngitis, told MPs that the airline's business rescue practitioners must consult with unions and creditors during the process of developing their plan. The plan must be published within 10 days of its finalisation. Parliament will then have an opportunity to study it, he said.

"The key issue going forward is the provision of finance. There is money coming from lenders and DFIs (development finance institutions) and the way we want to handle this is as a process that allows us to create a viable airline that can go into the future," said Gordhan.

After the meeting, Dongwana told Fin24 that he was pleased with the meeting and Scopa chair, Mkhuleko Hlengwa’s appreciation of the delicate business rescue process.

"The chair put it well that everyone should give the business rescue practitioners the time to finalise the plan and publish the plan and then come back to Scopa in context of a business rescue plan to answer all of the questions," said Dongwana.

MPs did, however, express misgivings about the department arguing that a provision in the Public Finance Management Act allowed the airline to abstain from tabling financial statements. Gordhan said there was no deliberate attempt to flout PFMA requirements. It was merely a consequence of the business' financial realities, the minister insisted.

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