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SAA is solvent. Now it needs a plan to fly

Future for the SOE still looks uncertain.
Image: Bloomberg

South African Airways administrators are preparing to wrap up work on the dormant state airline after more than 15 months, yet questions over its future viability remain as the Covid-19 crisis depresses demand.

Read: MPs slam SAA BRPs for no-show

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SAA tries to replace locked-out pilots with outsiders

SAA is close to being “both solvent and liquid,” with remaining issues including outstanding employee payments and the appointment of a receiver to take over financial management likely to be resolved this month, a team of business-rescue experts led by Siviwe Dongwana said in an update.

While the carrier has cut almost 80% of its workforce and reduced liabilities to R2.6 billion from R38 billion after deals with creditors and lessors, there’s no indication of an imminent return to flying. Global air traffic is expected to remain depressed for years, and even relatively strong airlines remain dependent on governments and shareholders for help.

SAA has been struggling for years, with the latest administration process initiated in 2019, months before the pandemic struck, in a bid to end the steady stream of state bailouts that had kept it afloat.

Flights ceased in March amid global lockdowns, and though administrators said management is working on the restart plan, no date for a return has been set.

Future funding

With the pandemic continuing to depress demand, future funding for the airline will be the thorniest issue. Finance Minister Tito Mboweni agreed to free up R10.5 billion in October but remains a strong opponent of SAA being a burden on stretched national finances.

“The challenge will be in funding the airline over the next four to five years, as it will still be making losses during this time,” said independent aviation analyst Linden Burns. “It is still going to need state support.”

The government wants to find a private-sector partner for SAA, but with almost every carrier around the world in crisis, options are likely to be severely limited. Public Enterprises Minister Pravin Gordhan said last month that three potential candidates had been identified. Ethiopian Airlines Group has expressed interest in the past, though as an operational rather financial ally,

The administration process has taken place against a backdrop of legal actions. Some, including claims from domestic rivals Comair and Airlink, have been resolved. A dispute with pilots is ongoing, as is SAA’s own litigation against Namibian staff it says stole close to $1 million in a baggage-claim fraud.

© 2021 Bloomberg

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No plan made in these times will be fool-proof.

This is the story – let’s see….
As per journalist Carol Paton on 23 March:
SAA is being probed by aviation authorities for an EXTRAORDINARY DANGEROUS event during take-off to Brussels, amongst other the UNPRECEDENTED number of EXEMPTIONS it organised before the flight.
One of the exemptions was….(listen to THIS) that SAA pilots who lacked the “recent flight hours required” were in fact permitted to fly the plane!
There’s no details about what exactly happened on take-off and neither are there passengers to describe the nature of the incident on take-off because the Airbus A340-600 was on its way to fetch Covid vaccines.
It all boils down to cutting corners – BANG goes the traditional so-called SAFETY record of SAA (plus another huge incident on an international flight last year that shook the passengers to the core, according to their reports afterwards)

It’s an accident waiting to happen.

http://www.dailymaverick.co.za/article/2021-03-23-saa-probed-after-take-off-blunder-on-covid-vaccine-flight/?utm_medium=email&utm_campaign=Afternoon Thing Tuesday 23 March WC&utm_content=Afternoon Thing Tuesday 23 March WC+CID_3acdb19bc7887bcd4c042545a52e503d&utm_source=TouchBasePro&utm_term=SAA probed after take-off blunder on Covid vaccine flight
This is another article on this flight, not paywalled.
The pilots only miscalculated the load with a figure of 90 tonnes !

Just ask Kulula if you can put a sticker on their planes saying they’re part of South Africa and then let SAA go.

SAA = just another Tax like CGT, PAYE etc.

Money down the drain.

In true socialist style a failed business is propped up by taxpayer money so that Jamnadas can protect his legacy. Commercially the deal is as useless as he is which will be evidenced by his inability to manage Eskom through its pending bankruptcy.

Comrade Jamnadas-well done-let your voters die of Covid as you struggle to implement any form of vaccination for COVID so that you and your accomplices can fly for free for a few more years.

Like Stalin, Honecker, Cseachesku and other rubbishes, in substance the people actually come last-and the corrupt party first!

There is no ideology to the ANC as they are a criminal organisation. The technical division is steeped in graft and there are vested interests in keeping SAA alive because of the lucrative service contracts.

Let’s have a commitment from all citizens, never to fly SAA again. if the government do the right thing by shutting it down, much like eTolls, we must sink it for the good of the country.

Here Here, Lets give the ANC the same service commitment that they give the Tax Payers. ZERO

Cyril and the Socialists who think Success is Based on Motivation and Not Results will have a hard lesson to learn when all the money is gone!

Full commitment from me and my friends !!! – They need to get Spurred !!!

MANGO too – it’s part of SAA

Let SAA go. It is sinking South Africa and will cause many more job losses by trying to save SAA jobs.

If SAA is solvent then I’m Elon.

The SAA saga will go down in history as the moment the socialist movement lost all sense of South African Lives Matter to a warped ideology that has been the biggest failure in human history. PG you are a disgrace.

I will do all I can to fly with anyone other than SAA after their treatment of the Pilots. No integrity = no patronage from me or my staff.

Not only treatment of pilots – what about treatment of tax payers!!!

So the SAA-Scam survives whilst the tens of millions of poor continue to suffer?
But of course, the politicos need their free flights for themselves, their family members, girlfriends and mistresses.

Yes.

In addition the anc cadre’s don’t even have to fly backwards and forwards to parliament. THEY ARE ALL SITTING AT HOME!!

Oh! I forgot. They and their family can use it when they want how they want. For holidays and the likes.

Must say I feel ZIP for the poor bugger that keeps voting them in. Maybe he deserves what he gets????

Don’t be too had on them, guys. SAA, as one of many bankrupt SOEs and municipalities, is simply the physical manifestation of the collectivist ideals of equality and social justice.

This is the inevitable results when “accountability lies with the collective” when the “resources and the land belong to those who work it” and when “property is shared”.

You see, the results of the practical execution of these supposedly “progressive” ideas have never been seen by the average voter. There were no examples before the ANC came to power because the previous rulers believed in property rights and the rule of law. South Africa has been a public running experiment in socialism over the past 27 years. People who do not read are bound to learn from their own mistakes.

These failed policies were executed flawlessly, we have to at least concede that. The ANC implemented the failed fascists policies of cadre-deployment, tenderpreneurship, redistribute taxation and all the rest of the infringements of property rights diligently and efficiently. The failure does not lie with Luthuli House, therefore. The cause of the economic and employment disaster lies squarely with the voter who supported the socialist redistribution of the assets of the nation.

The disgraceful state of events at SOEs is nothing more and nothing less than the physical manifestation of the collectivist mindset. These bankrupt public institutions, the implosion of service delivery and the inhumane and shameful unemployment rate are the consequences of the shortsighted and ignorant ideas of social justice and equality.

I should correct myself. The previous government did not respect property rights and they did not respect the law. The law is supposed to treat everybody equally and to protect the property rights of every citizen. The previous government applied the law arbitrarily. The National Party government was tantamount to the rule of man, not the rule of law. The new government simply exchanged one terrible mistake for another.

“We shall not grow wiser before we learn that much that we have done was very foolish”. – Friedrich August von Hayek

You mean the new government has taken theft much further than the Nats and added unprecedented levels of corruption, mismanagement of the country and a callous thick skin towards citizens and the poor – hence SAA still flapping about in the mud after all these years!

What do you mean “don’t be too hard on them” Do you think for a moment they say “don’t be too hard on the poor, or the tax payers?”

I often quote you Sensei. Ons of my favourite quotes of yours is: “South Africa’s problem is that the people who vote for a living outnumber those who work for a living”

And I have no idea how one can solve that one

Thanks, kenincapetown.

There are broadly 2 options to solve the problem of parasitic voters who infect the economy through their tentacles that emanate from the legislature. Both solutions effectively sever the tentacles right at their source. The first solution is an undemocratic authoritative form of rule, such as the chiefdoms in the traditional collectivist cultures. The Chinese political model is a more sophisticated version of the same political solution. This non-democratic one-party rule authorises the ruler te to protect the economy from people who will parasitize the economy by voting for a living. The lack of human rights means that justice is swift and brutal, but effective. The Chinese economy will rule the world with this political system.

The alternative is the privatisation of all spheres of government. In a democratic dispensation with a constitutional democracy, property rights motivate individual accountability and cut the tentacles of opportunistic voters who vote for a living. The problem is that this solution depends on voters to push it through parliament. Therein lies the problem, because turkeys don’t vote for Thanksgiving.

We have the worst of both worlds. We have collectivist voters who do not own property, but they have the democratic right, enabled by the constitution, to plunder the property of others through the legislature. In such a situation, famine is inevitable, as it is up to nature to try to solve the problems. Zimbabwe and Venezuela come to mind.

the debt of SAA might have been deferred because the state is the guarantor of their debt so this deal with creditors could be interest payments being deferred due to the controlling and vested interest they have in the airliner. Part two could be a BEE or some investor we might not know of that perhaps purchased equity via debt to equity swap. The underlying agreement of the BRP was to liquidate the airliner, which was the original approach then the unions Numsa, Pilots association, cabin crew union all got involved in the BRP process because the outright majority union at the airliner did not want close to 5000 staff to be laid off. Treasury declined a bailout however they needed instant cash to keep the operational viability afloat and also to pay out severance packages to those affected. After lengthy BRP negotiations with parties, scopa, DPE stakeholders alike, out of nowhere how is it possible that liabilities are massively reduced from 38 billion to 2.6 billion that means someone purchased that debt. We as taxpayers might not fund the full cost of the debt but that reduction in liabilities are of grave concern. One cannot just magically reduce liabilities unless someone or people are buying that debt.

Thanks for the info. Gordhan has been talking about potential investor/s since the rescue process started – at one stage there was even a church in Kwazulu/Natal with a couple of million members punted as an investor, or potential investor.
Why would it be of “grave concern” if part of the overall debt is taken over by an investor? Do you mean depending on WHO takes over the debt it could be of grave concern?

SAA is solvent. Now it needs a Plan(e) to fly! 😉

And a pilot with enough flying hours to know what he’s doing and how to do a take-off safely, plus a CEO and Commercial Director to run the business side . Mind you, Pravin Gordhan normally does that….

Donald Trump needs a new plane.

Honestly after the brand damage i find this amazing. So it seems there might be a group of people (some presumably SA taxpayers?) who would still book a ticket on SAA after all the corruption and wastage.

All i can say is wow. I don’t expect to ever board an SAA flight in my lifetime. Amazing how people can keep supporting a company that is milking them dry, literally destroying this country.

I think “support” will come via the taxpayer in spades. All ANC government, SOE and municipal oaficials will only be able to use SAA by diktat and regardless of actual costs. Jamnadas will not be denied and Cyril couldn’t care less; he is dreaming of EWC game farms and wine estates.

See the “vaccine collection” flight; ridiculously costly, lies about other cargo and two safety / incompetence incidents on the flight; one where the Airbus computer had to take over and a noise exceedance leaving Brussels.

ANC cadres cannot run any sort of even slightly complex system; see Escum; now they want to fly and maintain passenger aircraft! Tragedy incoming.

AND Mango – part of the same Gordhan ego bankrolled by tax payers!

“SAA is close to being “both solvent and liquid,”…. and the best thing now is for it to be put in a glass case and forgotten.

Liquid??? Great ready for the toilet.

Don’t be fooled. The ANC has no ideology. It is about enriching criminal networks that are taking their money to Dubai (or similar) as quickly as possible. The technical division at SAA is one big pool of theft and graft. There are vested interests in keeping SAA going. The ANC is nothing more than a club of gangsters, and if they had an ideology I would at least have some admiration for them.

It might be solvent but Moneyweb needs to get the story behind the vaccine flight published.

I did put it up here but obviously dangerous and embarrassing for the beloved ANC, SAA, CAA and others.

Link?

Google Alpha Floor event on an SAA Airbus. Happened on the vaccine ferry flight out of ORT

Heard on the radio this am … not reported within 72 hrs. Lucky the plane didn’t stall. Who would risk their lives flying SAA now?

Maybe COVID 19 has partially ‘solved’ our massive SOE debt black hole issue in SAA by a prmitive forced reset of sorts, by totally disrupting the airline market. Maybe its what the country needed, to shake up SAA for the country’s benefit. A silver lining perhaps..although there must be significant pain for employees.

Perchance, could COVID also disrupt EishKOM for a reset?

The “almost solvent and liquid” is according to the business rescue practitioners who obviously will paint a rosy picture otherwise it means they failed and can’t justify the whopping millions they rake in.
It’s not according to any audited financial statements – why don’t the business rescue practitioners rather tell us when we can expect to see that set of documents?
Till then, take everything with a pinch of salt!

I am skeptical about the financial details of this deal the administrators arranged with creditors. The debt was reduced by a factor of almost 10. Did all the debt go up in smoke? Or did the creditors defer the due date on the debt (or at least a portion of it) while continuing to earn interest on it? If it is in fact the second option it would explain why the government would have a vested interest in keeping SAA afloat to pay the deferred debt (as government is the guarantor of SAA).

What I can’t figure out about the debt is what happened last year when all those state guarantees to the banks became payable? They all refused to roll it over any longer and in fact drew up a special document with terms and conditions (or created a special vehicle/account) for government to pay the money into.
That was the last we heard – no confirmation that the rescue practitioners did in fact make the payment. The banks were one group of creditors out of many – so I wonder if all debt to the banks is now settled.
The stinkiest feature of those payments was the way in which smaller businesses – many suppliers over many years – were sidelined, getting zero!

You need passengers to fly. Who is first inline?

My mother in law; I’ll buy her a ticket! But first she must take out a funeral policy….

Not to mention good pilots

End of comments.

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