Gordhan says 'new' SAA could fly in the first half of 2021

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Government will be partnering with the private sector in the launch and manage the new SAA. (Yunus Mohamed/Photo24)
Government will be partnering with the private sector in the launch and manage the new SAA. (Yunus Mohamed/Photo24)
  • Finance Minister Tito Mboweni announced in his medium-term budget that the state-owned airline has been allocated R10.5 billion to enable it to proceed with its long-delayed business rescue plan. 
  • Minister for Public Enterprises, Pravin Gordhan, says the state will be partnering with the private sector in the launch of the 'new' SAA.
  • Gordhan says failure to allocate the funds would have resulted in the liquidation of the airline at the cost of more than R18.5 billion. 

    Minister of Public Enterprises Pravin Gordhan says government will be partnering with the private sector in the launch of a new SAA by the middle of next year.

    Finance Minister Tito Mboweni announced in his medium-term budget that the state-owned airline has been allocated R10.5 billion to enable it to proceed with its business rescue plan. The flag carrier was already placed into business rescue in December of 2019, before the coronavirus pandemic caused a sharp contraction in global air travel.  

    In a statement released by the Department of Public Enterprises on Thursday, Gordhan welcomed government's commitment to provide the funding.

    Gordhan said he was "shocked and disappointed" by what he regards as a manipulation of facts about SAA. In response to criticism of the funding, he argued that failure to allocate the funds would have resulted in the liquidation of the airline at the cost of more than R18.5 billion.

    Furthermore, according to the minister the liquidation would have meant that SAA employees would have been worse off than under the business rescue plan, as they would have received a maximum payout of approximately R32 000 per staff member - regardless of years of service - to the extent that there are funds available. They would also only have received payment once the final liquidation and distribution account had been approved, which could take up to 24 months.

    Gordhan's statement did not mention anything about government assistance for employees at state-owned regional airline SA Express, which is in provisional liquidation.

    Thanks to the R10.5 billion allocation, an interim board, and interim CEO and CFO will now be appointed for SAA, said Gordhan. The statement does not indicate what the status is of Philip Saunders, who was appointed as interim CEO a few months ago.

    "The DPE is engaging constructively towards the national interest objective of the formation of a new airline in the first half of 2021, which will be run in a professional and sustainable manner to support key economic sectors – including tourism, and solidify South Africa as an African gateway to international markets," read the statement. 

    Despite SAA finally being allocated the funds, nothing much can happen until bridging capital is obtained, most likely from banks. This is because money allocated in the medium-term budget will only become available in January next year.

    Mboweni indicated during a post-budget briefing that the R10.5 billion is not for starting a new airline, since that "is still a process being undertaken" between the relevant spheres of government, while also denying that the funds constituted a "bailout". 

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