SAA flights at risk without R2bn from govt – union

Minister has ‘fingers crossed’ that money can be found.
State-owned SAA entered a form of bankruptcy protection last month in an effort to rescue the company and 10 000 related jobs. Image: Shutterstock

 South Africa is scrambling to find extra funding to rescue South African Airways (SAA), which last month entered a form of bankruptcy protection in an effort to save the state-owned company and around 10 000 related jobs.

Tito Mboweni, the country’s finance minister, told business leaders in Johannesburg ahead of the World Economic Forum annual meeting in Davos next week that the Treasury had provided “financial support to the best of our abilities”.

“As of yesterday when I was speaking to the director-general of National Treasury we were still trying to find additional financing for SAA. … Let’s keep our fingers crossed,” he said.

Read: Bye bye SAA

SAA was promised R2 billion rand from the government and another R2 billion from lenders. But while the lenders paid up, the Treasury has yet to establish a mechanism for identifying and dispersing its share.

The airline is one of several state entities, including state power company Eskom, struggling with debt after nearly a decade of mismanagement.

Their woes are seen as the single greatest threat to Africa‘s most industrialised economy and have been largely responsible for bringing South Africa‘s credit rating to the brink of junk.

Fearing another downgrade if it raises its deficit, South Africa‘s finance ministry has sought to fund SAA in a “fiscally neutral” manner, by selling assets or cutting costs elsewhere.

Troubled times

Handling these issues is seen as the biggest test of President Cyril Ramaphosa’s commitment to economic reforms.

“The pace of structural reforms is not the way we want it to be, so we need to speed it up to generate this impetus to economic growth,” Mboweni said.

But without cash, SAA could very quickly become insolvent.

On Wednesday, business rescue practitioners Les Matuson and Siviwe Dongwana said they were “hopeful that a mechanism can be found to unlock the liquidity constraints.”

However, a trade union official warned that SAA could be forced to suspend some flights and delay salary payments if the government does not pay up very soon.

The government’s treatment of SAA and whether it is willing to sacrifice jobs will send a signal ahead of a much bigger battle with unions over ailing state utility Eskom, which is struggling to keep the lights on.

Eskom’s chairman resigned last week after power cuts even during the low-demand holiday season. The company is also fighting the regulator in court over energy tariffs.

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COMMENTS   27

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Shoot this horse with the broken leg already !!!!!!!

It will be the best news for the bleeding tax payers if SAA closes down this weekend.

This whole Business rescue thing is just a way to keep milking the taxpayer.

It will cost billions more and will go from bad to worse.

Agreed, even to me it is pretty obvious what needs to be done. Evaluate the parts of SAA and sell off those that will find buyers (Mango, SAAT and maybe Air Chefs) but no BEE ANC elite favouritism deals (like happens with fuel, spares etc).

Then close the rest, selling off the pieces.

Instead what do we see – a bankrupt (no financial statements etc) SAA still signing deals on newer aircraft. This is fraud or reckless trading surely?

Why is it happening? My guess, to enrich the ANC tenderpreneurs, keep lazy cadres employed and provide free flights for the politicians and their extended families. Screw SA.

100% correct – the delay of closing down saa is just costing, not to the cost of this useless government, to the cost of the taxpayer – what i can not understand is the nonchalant attitude of the bigger voter group, this wasted money could have been spent on dilapidated schools, hospitals etc but insight into the full picture is very limited by these voters and with unions indirectly / directly dictating to the anc, together with their party infights, the country’s future economical picture is dimm

anc wants to run the country on socialist basis, but needs money from the capitalist system

Which is exactly why education is such a disaster. The rulers of our democracy have the mushroom policy for their voters. Keep them in the dark and feed them youknowot. Foolproof.

Sick and tired of useless ANC and their bloated SOEs. Hope this one goes under ASAP

Where is the money received from tickets that were sold?

How many times must this happen before we shut it down? It is staggering to think what a difference all that bailout money could have made to this country. Just end it already

R2 billion from lenders already exhausted?! Jeez, I wonder how they will pay them. Shut this airline down for goodness sake!!

And in the meantime the rescue practitioners rake in THEIR couple of cents so the longer it drags on, the higher the payment becomes…

Employment creation. lol

The ANC is now the largest employment agency in SA. Its vote buying program will see SA crash into bankruptcy. Cyril and his team of incompetents don’t seem to have the political will/desire to remedy this situation.

Absolutely. Consider, we have Central Government, 9 Provincial Governments, Municipal Councillors. NONE OF THE ABOVE ADD ANYTHING TO THE BOTTOM LINE, in fact they all cost the taxpayer, ratepayer. Add to this the bloated SOE, who are all a drain the taxpayer, consumer. S A Inc is broken

The free business class tickets used by the government and their families should be published. Bumping off paying customers so that they can fly free??? Perhaps this is why it’s kept under rescue, so that these perks can still be abused

Just do the honourable thing and euthanise this thing already. Thereafter try to salvage some lost monies (and face) and chop it up and sell off what you can. Get it over with as soon as possible so that we can put an end to this continuous/senseless milking by the trade unions and government.

SAA’s business model is based on annual bail outs. That is unsustainable.

Oh bloody hell.when will this circus ends?

I have to laugh every time someone says “that R2bn could have been used to build hospitals, schools, houses”

AS IF!

We are dealing with the most corrupt government on the planet. Even if that money was available, these clowns would always find a way to steal it.

SA is a kleptocracy, plain and simple.

You mean the exorbitant salaries of the business rescuer -R25 000 per day -and the ANC parasites are at risk.

the ANC seems to think that it can raise the dead – what they are actually doing is putting a brain dead patient on VERY expensive life support – we, the tax paying minority, have to supply the oxygen that keeps this patient alive, and all of the other patients in the room….#SSDY same short different year

SAA is like a bad rash that wont go away. Shut it down already.

You have to love the comment “Minister has ‘fingers crossed’ that money can be found”

But when it’s looting time, party time, government bonus time, civil servants salary increases time, overseas trips and of course our National Snack KFC time, there’s always money around

A standup comedian can make a fortune in this country by telling real stories of civil servants and Parastatals. Despite being scary and worrying, its hilarious.He needn’t even sugar coat it

At what point will the beneficiaries of the feeding trough and the gravy train let SAA die and move onto some other source of illicit income for family, friends and cadre? Nearly 90 years of awesome service to South Africa and our brilliant rulers have destroyed one of South Africa’s finest assets in its last 15 years. Well done guys, I guess you are proud of your achievement.

The minister has his fingers crossed? 1diot!

I’m the breadwinner in my family, I have worked for SAA for 19 years. Soon I will be forced to emigrate overseas leaving two sets of parents and extended family because of rampant mismanagement within a once profitable company.

My skills are transferable and in demand overseas but at a great cost to my families way of life and our family unit.
This is the beginning of a humanitarian disaster.
SAA is just the beginning..

End of comments.

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