Government commits to funding a restructured SAA

It’s understood a letter to this effect was signed by both Mboweni and Gordhan.
According to the rescue plan SAA will need R10.3 billion for its restructure. Image: Supplied

The South African government has provided its commitment to support and source the funding of R10.3 billion needed to restructure South African Airways (SAA).

A letter of support, in which government makes this commitment to raise the requisite funding was signed by both the Minister of Finance Tito Mboweni and the Minister of Public Enterprises Pravin Gordhan on July 15, the deadline set in the business rescue plan. 

Government has committed to mobilising funding for the “short, medium and long term requirements to create a viable and sustainable national airline”.

Read: 86% of creditors vote in favour of SAA rescue plan

DPE and pilots pull in different directions ahead of critical vote on SAA rescue plan

The commitment comes after 86% of SAA creditors voted in favour of the final rescue plan that is aimed at “attaining a financially and commercially sustainable and viable airline, and minimising the negative social impact of the restructure,” as director-general Kgathatso Tlhakudi said to creditors on Tuesday. 

“The DPE is cognisant that airlines across the world are in turmoil due to the COVID-19 pandemic,” it said in a statement welcoming Treasury’s commitment.

“There are possibilities for airline partnerships to improve scale and scope and ensure continuity of value creation to the South African economy and long-term sustainability of the aviation industry. These are possibilities the government is exploring, including broader private sector participation.”

Thlakudi, who has previously mentioned that government is not “obsessed with control” in the new carrier, told creditors that the government is in the process of appointing a transaction advisor to help finalise initial engagements its had with potential investors.

“While maintaining a certain level of presence in the ownership of the new carrier, the DPE welcomes the attraction of a mix of local and international investor groups to provide the new airline with technical, financial, and operational expertise to ensure significant South African ownership whilst diversifying the investor base”.

The restructuring of the airline will include severance packages for over 2 700 workers who will receive voluntary severance pay totalling R2.2 billion. 

All employees, including their unions, have to reach an agreement on the reduction of employee numbers by July 17 failing which a section 189 process will be initiated by the rescue practitioners by July 22.

 

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Wow. 86% !!!! Sounds like a very convincing number.

How much of the 86% is the Government?

The BANKS – lenders with government guarantees!

so the Banks have nothing to loose!

I think this reveals that the SA economy is a house of cards. Remove one card (i.e. default on one loan) and the whole lot will collapse.

Now for all the REST of SA’s floundering SOEs….
But the world and potential investors in the SA economy are not fools!

To Sum it up for SAA … and the rest of Government….

“When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns it’s back on progress and can be restored only by the terrible lessons of catastrophe.” ― Frédéric Bastiat, Economic Harmonies (Published 1850)
…….. by the way…. Thanks Pravin Gordhan (u stuffed up this country together with your comrades)

The government commits to funding SAA on behalf of all the Taxpayers……

Which means us tax payers and attachments also get to fly the globe for free?

As a 30yr old this was my final straw to lose faith in ANC.

You may laugh that I believed in Cyril but I’ve seen him in business – he’s not stupid or lacking talent!

But if Cyril can’t stop the UTTER stupidity of saving SAA then no one can save ANC.

SAA is a multi-Billion liability ..every year. SAA is also non-core (other airlines exist to transport people). Literally no reason to keep SAA other than bowing to COSATU pressure & keeping free 1st class travel open for ministers.

My first thought was to emigrate. But I love SA lifestyle (food, countryside, people) so I’ve set up export business (earn foreign currency). Learnt this trick from Zimbabwean friends who still have good lives in Zim despite their country crumbling.

Export helps many issues but its not perfect (if safety is too much of an issue then time to emigrate regardless – export helps this as we now have contacts overseas to do work).

Hopefully SA can find new leadership. I have little faith ..but at least I have US dollars as an insurance policy

For a moment I too believed in a turnaround within the ANC; thinking the old guard is back (esp. Cyril and PG). But they have no leverage to turn around the party.

Pravin Gupta is better suited to sell sweets to the pikinini’s in the townships.

He is just making a real hash of things now.

Guess the whole deal was premised on the fact that Mboweni would eventually wilt and loosen the purse strings, after stating he would not do so. I don’t envy the guy. The pressure on him for us to have the ‘national pride’ of a wonderful SAA must have been massive. But, heck, the taxpayers will pay, as they always do…..

More hard earned money thrown after bad. How many hospital beds could this have provided. Obviously the ANC love having their own private airline.
Time for taxpayers to stand together. Let us boycott the new airline.
I will continue personally and from my company continue to boycott SAA so as not to undermine the private airlines.
We showed our muscle with tollgates, we can do it again.

There is no reason whatsoever to suggest that a restructured airline will be any different from the one that’s gone bust. I hope these two Ministers prove me wrong, but the same management, inefficient “couldn’t care less” attitude staff would suggest this too will fail.
You won’t find me using it.

Three hail Marys for the “support and source” funding approach to landing this Max problem.

Much better than the “finance and approve” Concorde-type take-off disaster.

There are no consequences of failure. This confirms that none of the decision-makers actually understand the concept, which exacerbates the action. Like most politicians, their actions are aimed at and with their voter base kept in mind. The upside-down pyramid tax base will collapse, and this will inevitably add to our ever-spiraling debt. Not to mention the looming re-failure of the airline- unless they legislate protection from other airlines- which they’ve done before- in a way.

The way the government is running/trying to run this country and its economy is absolutely mind boggling. The words “rational” and “logically” comes to mind.

Please do not play roulette with tax payers money.

In roulette you have a chance of winning. I pity the CEO having to deal with politics and UNIONs. Mark Barns (ex post office CEO) nearly pulled it off; but politics caught up. Now the PO is back in the doldrums.

They are mighty free with my money.

Mboweni has been very clever under pressure. He commits to “support and source”, not “provide” funding. Very different things. PG and the union idiots are so busy self congratulating they don’t realise the difference! They could end up with zip!

Indeed, Mboweni is boxing clever. I think he’ll rather resign than dip more money into that cesspool called SAA. He ignored them in January and went to Davos without committing to SAA. Then the comrades put pressure on DBSA CEO and Board to throw the R3.5 billion into dodo SAA.

End of comments.

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