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Bailout delay leaves SAA teetering

It’s doubtful the airline can continue operating until the end of next month without additional state aid.

South African Airways (SAA) said “time is of the essence” for the government to provide a pledged cash injection if the loss-making national carrier is to continue flying.

The National Treasury agreed last month to give the airline R2 billion as part of the terms of its bankruptcy protection, but has yet to follow through. SAA canceled 38 flights this week to save money and warned that further cuts may be in the offing.

Read: SAA cancels 38 ‘low demand’ domestic and international flights

“We are awake to the fact that the money we need will serve as working capital and that time is of the essence,” Tlali Tlali, SAA’s spokesman, said by phone on Thursday. “While we do not sit with cash in hand, we remain optimistic that there will be a favourable outcome. We have been notified that the matter is receiving priority attention.”

SAA has lost money since 2012 as it grapples with mismanagement, high operating costs and an inefficient jet fleet, leaving it reliant on government bailouts to survive. Les Matuson and Siviwe Dongwana, who were appointed as SAA’s business rescue practitioners last month, are due to present a turnaround plan to creditors by the end of next month, but it is doubtful the airline can continue operating until then without additional state aid.

Read: What might a rescued SAA look like?

And: Bye bye SAA

‘Working feverishly’
Finance Minister Tito Mboweni said the National Treasury is “working feverishly” to source the R2 billion, which wasn’t provided for in the budget and will have to come from other sources.

Read: Government still looking for R2bn to save SAA

“We have given our commitment that we will try to support SAA as much as we can and that we will work as much as we can to help,” Mboweni told the SABC in Davos on Wednesday. Dondo Mogajane, the Treasury’s director-general, didn’t answer calls to his mobile phone.

The National Union of Metalworkers of South Africa and the South African Cabin Crew Association, which represent about 3 000 SAA workers, accused the government of undermining the effort to save the airline.

“We believe they have sabotaged that process,” Numsa spokeswoman Phakamile Hlubi-Majola said by phone. “It is unacceptable that the R2 billion that was promised has still not been paid. We want to see action.”

The top leadership of the ANC has decided that SAA must be retained and restructured to ensure it becomes financially sustainable, Enoch Godongwana, the chairman of the party’s economic sub-committee, told reporters in Johannesburg on Wednesday.

© 2020 Bloomberg L.P.

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COMMENTS   18

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Just one big scam.

Lets hope the rest of the world takes note of how corrupt this country has become.

This business rescue thing is the biggest BS I have seen in my life.

Nothing has changed. How do these “Practitioners” or shall we call them (corruption facilitators) expect to get this thing flying.

TSK!!!

Finance Minister Tito Mboweni said the National Treasury is “working feverishly”.
Absolutely sad and disappointing but not surprising. Had they worked feverishly for the last 10 years the current disaster (that everyone predicted) would not have happened.

Cynical me reckons these ANC elites are “working feverishly” because they have a list of free holidays planned with wife / girlfriend / sidechick (or all three) doing some Grace Mugabe type shopping. Plus many may have an incompetent and or corrupt ANC cadre chum sprawled in an executive office in SAA picking his or her nose. They definitely do not have SA’s interests at heart.

Aircraft on the ground do not generate income.
Euthanaise it and put all taxpayers out of their misery.

I was hoping that it would teeter over the edge.

I suppose the desperation of the ANC to get more money through it is keeping it on life support.

Why not just share the R2billion equally amongst the sitting MP’s. At least then we will know where the money went to when SAA folds.

the bail out will keep them going for how long ? then they’ll be back hat in hand. the ANC seems to think that the shrinking pool of tax payers can just shoulder the burden of keeping the various SOE’s going – the same SOE’s that use the unions to get guaranteed increases for years to come. at the current rate of tax increases I will have to get a second job so that I can afford all of these taxes that are being imposed or will be proposed after budget 2020…

China is the answer!

(Their “debt diplomacy” is said to be very effective…)

…either that, or (temporarily) reduce the SASSA grants for the next few months 😉

It can be explained to the grant beneficiaries that it’s “only a loan” and will be repaid “at some point” in the future.

(…and it needs to be diplomatically explained, in all 11 languages, that “it’s a small sacrifice to pay” for voting ANC.)

Problem solved. No need for Treasury to “work feverishly”.

It may work. The previous government (NP) still owes me R76 odd Rand at 2% interest from 19” something.

Mothball SAA, who needs it, serves no purpose. Cities in SA have no potable water, infrastructure collapsed, governance dysfunctional, municipalities corrupt, ad infinitum, what’s the common denominator???

Please die already

SAA, Pravin and Tito have a difficult job as they seem to be approaching the banks for a guarantee free loan from them. Banks have another problem they are answereabble to their shareholder so surely if they this type of money to SAA they need shareholder approval, can’t see that happening.
Taxpayers personal and business needs to start insisting that government be accountable and responsible as to how the divi up up taxpayer funds – I suspect the government is bankrupt not just SAA and a host of other SoE’s

Come on SA banks-here is a golden opportunity to score points with the ANC and join them in stealing from your shareholders! Take the Big six-its only about R330m a bank.

Brilliant banking leaders like Mr Mminele, Banking wizard Mr Tshabalala( how could Standard bank ever function without his wisdom) and the giant of Investment banking Fani Titi( deal after deal from this 24/7 dealmaker) can only do their companies and reputations proud by being proudly South African!

Surely you’re being facetious.
Last thing the bank sector needs is to lose the goodwill of ratings agents. tax payers. shareholders and clients with any type of reckless lending to SOEs! In fact. if clients are sufficiently alarmed should the banks finance any further ANC ideologies that increase taxes, clients can always work together to achieve a run on any particular bank….

What would be the point of a bailout? It seems SAA would just burn through the cash pretty quick and we’d face the exact same issue again, just with 2bn more lost.

This is the key point. But, if you are profoundly economically and financially illiterate, two billion ZAR sounds like a huge amount. It’s a drop in the ocean ocean; throwing good money after bad!

The colonialists started SAA, The Apartheid Regime perfected it and the ANC destroyed it. – Long live the ANC !!!!!!!!

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