Government bails out SAA again

Airline will receive R6.5bn to settle its guaranteed debt and R10.5bn to implement its business rescue plan.
Image: Tod Burns

The government has resisted opposition to it providing further bailouts to embattled national airline SAA, allocating R6.5 billion in the Medium Term Budget Policy Statement (MTBPS) to the airline for settling its guaranteed debt and interest and R10.5 billion to implement its business rescue plan.

The MTBPS states this allocation was mainly funded through reductions to the baselines of national departments and their public entities, and provincial and local government conditional grants.

The MTBPS made no mention of private sector funders, equity investors and partners for a future restructured SAA.

The Department of Public Enterprises reported in August 2020 that the South African government had received “more than 10 unsolicited interests for SAA and its subsidiaries Air Chefs, SA Airways Technical and Mango Airlines”.

Read: Acsa faces major losses from Covid-19 fallout

The department said at the time that, as the sole shareholder on behalf of government, it had been busy assessing the interests from the several unsolicited local and international Strategic Equity Partners (SEPs) as part of the implementation of the Business Rescue Plan, which was published at the end of June 2020.

The Organisation Undoing Tax Abuse (Outa) said last month current finance requirements of over R10 billion is required by SAA to cover debt and operations costs, aimed at merely keeping the airline limping along.

It believes a humane severance package for staff and debt settlement arrangements with current creditors should rather be sought and government should step away and liquidate SAA as soon as possible.

Outa said the business rescue plan requires R24.9 billion to repay debt and R2 billion to restart SAA with a 1 000-employee workforce.

It added that about R16.4 billion is to be repaid over three years, as mentioned in the 2020 national budget, and government is trying to mobilise a further R10.5 billion to implement the R26.9 billion requirement of the business rescue plan.

“We believe these figures may be insufficient to resuscitate the airline,” said Outa’s executive manager on public governance Julius Kleynhans.

There were reports this week that talks between the government and the World Bank over a $2 billion loan facility had stalled over the alleged insistence by the bank that government commit to not bailing out insolvent state-owned entities using the $2 billion standard loan facility it has applied for, and cutting the public wage bill.

Read:
Mboweni finally moves to slash government wage bill
World Bank talks with SA stall over SOE bailouts

The Democratic Alliance (DA) last week said the International Monetary Fund (IMF), in characteristically diplomatic language, has made its view clear on government’s plan to bail out SAA again. This is according to a response it received from IMF Executive Director Kristalina Georgieva to a letter the DA wrote to her in early October 2020, to draw the fund’s attention to the government’s decision to proceed with a further R10.4 billion bailout for SAA.

It said the IMF has acknowledged the need for the South African government to weigh “subsidies to persistently loss making state-owned enterprises” like SAA, “against alternative uses of scarce public resources, including investments in alternative growth enhancing and/or poverty-reducing investments”.

The DA added that the decision to another lifeline to SAA is at odds with the commitments Finance Minister Tito Mboweni made in his Letter of Intent (LOI) sent to the fund to secure a $4.3 billion emergency loan.

It claimed the LOI clearly commits the government to use the funding from the IMF to support health and frontline services, solve the balance of payments problems caused by the pandemic, protect the vulnerable, support economic reform, drive job creation and stabilise public debt.

Read:
Government receives ’10 offers to buy SAA’
Public-private partnership will not save SAA
Ethiopian Airlines limits SAA offer to pilots, planes

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Well there you have it, folks, your hard earned money won’t go to schools or fixing potholes in the road BUT SAA…the ultimate show of contempt to SA’s tax base. You know what to do.

Yes. The police and education budgets have been cut.

Your safety and the education of children are less important to the cadre filth than a money pit airline. And then the filth had the audacity to applaud as the bailout was announced. Their contempt for us, the peasants, is just grotesque.

Add the R16 billion or so given in February

Where are you now Ghordan? Did the Unions and the rotten faction within your party pull your strings again?

It’s NOT GOVERNMENT DISHING OUT MONEY, IT’s our money being dished out by an incompetent corrupt bunch of leaders

Sadly, if this continues, we’ll reach a point of no return

Millions of unemployed workers line the streets in suburbs looking for work and they go ahead and keep SAA floating..How sixk

Billions stolen from Municipalities through corruption

No one yet locked up for capturing the State

The Zondo commission is a circus costing millions with no result

We’re being made fools of by thieves

so sad that there is no pill that helps for stupidity… 😉

Good one Chev! There is an injection for euthanasia though (and then being stupid doesn’t matter anymore). Which is what SAA and all its supporters need to be given and then they can all quietly disappear into the ether.

In short, this millstone just needs to be dropped down the well, otherwise we’ll be reading many future articles about further shenanigans and losses followed by more bailouts. Things will not end with this latest round of mouth-to-mouth.

True ANC / Commie style. Sanity suspended. Think careful if you want to pay tax for such insanity.

1. You have to question why they keep pouring money into a bottomless pit.
2. There is no retribution against those who caused this malaise.
3. This wont be the last handout- we have seen it all before, Management is sadly lacking, almost as bad as the shareholders (and I dont mean the taxpayers)

1. Freedom fighters, commies and trade unionists don’t do math. It’s difficult so they avoid it. It makes their head hurt.
2. There won’t be retribution because they are in government. The folks sitting in parliament are complicit in this theft of our future.
3. The handouts will continue for sure. That way the sheeple keep the ANC in power and are rewarded with a yellow T shirt and a SASSA grant.

1. You have to question why they keep pouring money into a bottomless pit.
Not at all…the only reason is free flights for the cadres for evermore….or at least until they have extracted every last penny from the taxpayers.

Can’t think that is the main reason, it would surely be far cheaper to buy them all tickets on another airline, if you now consider that with this round added, it must be about R50 billion in “bail-outs”.
IMHO, it is about feeding the patronage network, why do you think they have not tabled financial statements for years now? That money has all been stolen, and the anc now feels comfortable/untouchable enough that they can openly allocate more tax-payer money to one of their feeding troughs, even in the midst of the worst economic contraction in about a century.

1. because the members of parliament receive free business class trips for life ?

R6.5 billion, no strings attached. Not even a requirement to succeed or to repay. Nothing – just: ‘here, go forth spend to your heart’s contend.’

It can’t be helped – SAA is hopeless – its unavoidable death is long fortold. Merge with and be managed by Ethiopian, and get rid of these useless high paid executives and equally useless middle management and their ‘cover’ businesses that are fleecing SAA.

Tax Boycott

Nice theory but how in practice ??All but impossible .

SAA and Mango, a subsidiary, boycott!

Stop flying with Mango! FlySafair and Airlink tickets far better priced!

What a waste of scarce resources. The masses can walk rather than take trains while the rich fly. It makes me think of the comment attributed to Marie-Antoinette, the queen of France during the French Revolution (per Wikipedia), in the context of the peasants not having bread: “Let them eat cake”. In this context, if they can’t take a train, let them walk?

To his credit, Mboweni didn’t want to do it, but he was overridden by Pravin Gordhan and others. I now hope the schools with pit latrines and no running water gaze up into the skies with gratitude and admiration for our noble national airline as it flies overhead.

One hopes that all patriotic south Africans will show their feelings by boycotting this farcical airline.

A bailout for SAA is corruption at its worst. Run the operation into the ground (for decades) and then use your political power to force continual bailouts. Unacceptable.

I have to get drunk this weekend.lol

The reason for a third world country having their own airline in the first place is beyond me.

There is one sure way to out an end to this utter idiocy. Simply do not fly SAA. It cannot survive without passengers to transport. Boycott it. Me, mine and my employees will be issued T-Shirts that say “We do not fly SAA because we care about this country, its people and its future”

End of comments.

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