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Draft reveals new airline’s cost breakdown

Leaked rescue plan not yet approved – SAA business rescuers.
SAA last made a profit in 2011. Image: Supplied

The road to a new South African Airways (SAA) will cost the government an estimated R21 billion, according to a leaked draft business rescue plan compiled by rescue practitioners Siviwe Dongwana and Les Matuson. 

The document was released to creditors, employees and the Department of Public Enterprises for consultation.

Matuson and Dongwana have noted the media leak, cautioning against the interpretation of the proposed R21 billion plan as being set in stone. On Monday the practitioners were granted an extension to publish their final plan on June 8.

“Given that, it is a draft and has not received agreement or comment from any of the relevant affected persons we will not comment on the leaked draft to the media and will await input from the affected parties as is prescribed by the Companies Act,” Matuson and Dongwana said in a statement.

“To assume and comment on this draft as if it is the final version would be very irresponsible.”

“The extension will not stop the practitioners from continuing to take the necessary steps to progress SAA’s business rescue and will continue to take proactive steps to conserve cash and protect the interests of SAA”, concluded the BRPs.

According to the plan, the airline’s restructuring will require an initial capital injection of R2 billion. 

Employee retrenchments packages are expected to come in at another R2 billion but this would not have to be paid immediately, with the rescue practitioners saying arrangements will be made with employees to defer the payment until the government provides an appropriation for the amount, or a strategic equity partner provides a cash injection to cover it.

An amount of R16.4 billion will go towards payment of SAA’s lenders and a minimum of R600 million will be needed to pay the general concurrent creditors.  

Should this rescue plan be adopted government’s commitmet to SAA and the new airline will amount to R21 billion of which R16.4 billion was already appropriated in the February budget for historic debt. 

In a statement released on Thursday, the DPE the government has not discussed the plan or taken any decisions on the proposals.

“The government has embraced the restructuring process as part of a path to a new, dynamic and financially viable airline that will serve South Africa’s economic and strategic interests,” said the department.

“We will review the Plan, explore various funding options, and communicate our decisions in due course.”

The airline, which last made a profit in 2011, has been in business rescue since December 2019. Since 2003 it has received over R31 billion in government bailouts and its recently-released financial statements reveal that SAA has made losses of R10.4 billion in the past two years. 

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This is Madness. I’m quoting from the article: “Should this rescue plan be adopted government will agree to fund this R21 billion plan.

This is of course incorrect. The Government does not have one cent. The line should read “Should this rescue plan be adopted government will force Taxpayers to fund this R21 billion plan.’ Radical Airline Transformation is not needed. We do NOT need a National Carrier. Australia hasn’t got one. Our Ministers and President can travel First class on another Airline.

Agree – utter, utter madness. This airline has wasted billions upon billions. Yet we still have schools without proper toilets or even water. Only a crackpot Socialist government could dream up such a totally irresponsible scheme.

And yet when motorists call for scrapping of e tolls, the reply is “Where must we find the money?” Do we motorists not deserve a bailout too? After all, unlike the SOE’s, at least we put money INTO the fiscus.

Seems totally logical procedure and protocol to me.

In other words what needs to be done and is blatantly obvious to you and me and the normal taxpayer, well the government does exactly the opposite……

Well articulated plus R21bn just wipes the slate clean. The operating losses will continue and the plundering resume. If the banks have any spine they will refuse any further lending to SAA once they’ve been repaid. However greed means that’s unlikely to happen so the merry-go-round will restart.

While it’s true that government doesn’t have one cent, as you point out, it’s not to say it’s not capable of dipping into Tito’s R500bn relief package for business (as it actually views SAA as a business, not the glorified Ponzi scheme that it is.
Failing that, there’s always the Covid19 Solidarity Fund money….

You say that g’ment will force taxpayers to fund this R21 billion.
Now I wonder, when / how / where will pensionfunds be forced to (for example) buy SAA bonds?
Or Eskom bonds?
Or Petronas……?
Or Denell…?
Just asking.

Our ministers and president can travel First class on one-way tickets to Iraq.

We must remember this is a way of getting rid finally of the old dreaded apartheid airline. It worked, remember back in 1994, can’t have that. Nor was in constructed in such a way that it could be looted.

This one will be much easier to loot, that is after all the retired, fired, suspended cadres have their free tickets.

On another note, this is what they wanted to do all along, they got 1 Time out the way, almost managed with Cemair, SA express is gone and by the time they have this done it will be the only way to fly in SA.

Like the lockdown, WE have total control.

…absolutely, the longer Govt keeps all airlines from operating, the bigger the risk private airlines will fold (e.g. Comair, others). Govt attempting to kill their local competition. The only airline that can survives lockdown, is the one funded by the SA taxpayer.

(Probably also Govt aim to make flying more expensive, so to place extra cost on emigration of taxpayers. So fewer may emigrate & become loss to the state. Also perhaps why “formal emigration” process is to be abolished…could have to do with making it more difficult to withdraw ret funds prior 55-age due to emigration? Hence more funds become “stuck” in SA…convenient for ANC * later on to fund govt.).
The dots are there….just trying to connect them.

It will actually be easier. The formal emigration system is archaic and residency for excon will be tied to tax residence. It never made sense that you could live in another country for 30 years but still be regarded as resident for excon purposes.

Tito PLEASE stop this madness.
If you are going to spend money on airlines how about some for Comair who is is difficulties and has a chance of being an asset to the country going forward.

Remember, Tito isn’t a politician. He doesn’t carry much weight amongst the comrades. He will probably go soon – he is not toeing the party line.

It must be 15 years since I last flew SAA. BA and Nationwide a much better choice. I will NEVER fly SAA or its affiliates (and that includes Mango).


Taffy, I suspect that part of the plan is to continue the driving out of opposition, maybe more arrogantly and boldly than ever, so making “SAA” the only airline flying in SA. Think Aeroflot.

Agree. Need to boycott this airline.

Problem is this process and rescue mission doesn’t cost the government a cent – it on the other hand costs the taxpayers all of the money. The only thing the government get out of this is bragging rights if the new entity is successful and no acknowledgement to taxpayers. When are SARS going to tax spaza shops and informal traders?

R21bn to start and then billions in losses every year… With no success story yet, build on week foundations, etc. what guarantees can the government give us that this one will be profitable? Very hard to be optimistic about this attempt.

Another piece of socialist insanity. The regime is completely off the reservation.

Wonderful – R21Bn for starters. What about years 2 through to infinity…? Proof has already been overwhelming that Govt has absolutely no idea about business. Just look at what the collective of failed SOE’s have cost the public.

Only conclusion here is that these guys have continued to Zol in the lockdown!!!

The abused citizens of this country should put a stop to this madness with widespread protests.

Never-they will not protest about this-they voted for the ANC, re-elected Zuma and are now dancing because there is alchohol available.

In a democracy-flawed or not-you get the government you deserve!

Lets fix a catastrophic insolvency by doing exactly the same thing, with the same staff and management. Are the BRP’s certifiably insane?

Not sure what these Siviwe Dongwana and Les Matuson have done to earn the millions they did.
You two got paid for nothing. The tax payer was cheated!

Does not take a rocket scientist to figure out what needs to be done.

Unfortunately government who is the largest shareholder is schizophrenic. They were always on a hiding to nothing.

The BRP doesn’t mind what the ANC regime does as long as they, the BRP, get their fees. They have already collected R30m I believe, so not bad loot.

Sorry am i missing something here?

The headline is wrong. It is NOT – New Airline to cost government R21 billion. It should factually say – Old Airline to cost tax payer R21 billion, to return it to zero – but then what?

New Airline implies it will fly again and one would hope profitably. There has been an exponential increase in cash burn (loss) in recent years, to the point, we have hit R5,2B per year for the last 2 years. About R430 million per month.

For a brief moment in time, you will be back to zero, but what about the daily running costs of debt maintenance and just idling/ mothballing this dinosaur is millions a day, without a single staff member. I look forward to seeing more details, because at the moment this is bizarre.

I suspect any new ‘strategic equity partner’ – could only be a prescribed partner as in the PIC (no sane commercial entity would take this on), or a hybrid of same, which includes some GEPF funds, as the investment of a lifetime – that is how it will be sold to the public, that and patriotic pride, profits are not necesary according to Nedbank.

So this is SAA version 2.0. Clear the deck of version 1.0. Keep the government guarantees in place of R16.4B – allowing V2.0 to borrow against them, or act as ‘guarantees’ for the PIC to at least give the appearance of a safety net. Considering the accelerated cash burn in the last 2 years in a normal pre-covid market, i think now with aircraft likely to be only 30% as full as before, that it would only take 2 years to eat through a new round of R16.4 billion in debt, at R8.2B per year. Before the government bail out requests start again – but i suspect by then it will be page 6 news considering the plethora of other much larger problems bubbling under the surface.

Can probably build about 75000 2 bedroom houses with that.

The ANC is so lucky their voters are illiterate and not the cleverest as should they be able to grasp what is going on here the “Cardes” would end up like Benito.

This is disgusting.

The average Joe on the street distrusts the term “profit”. Cash must appear from thin air.

R21bn? I imagine there must be plenty to steal from this! So SAAs creditors get wiped out and a new airline is formed by buying the assets at a discount from the SAA wreck.

This ANC government is so hopeless it defies description.

But what is really sad is the apathy of the South African taxpayer-in the US an arrest resisting bouncer(possibly drunk) with health conditions is killed because of an incorrect restraining technique and the country goes crazy. Here we queue for alcohol like sheep!

yes, of course, bouncers should know their place

You missed the point. US people got off their ample butts and protested. here in SA the people being pauperized by a criminal clique…do NOTHING!
Do you understand the issue now-its not about the bouncer..its about how people react to wrongdoings…difficult for you..hey?

I Think I missed something…..did a mass infection of stupid just break out?

Nooooo…….just a 1st of June joke, silly…’all fell for this? ha!

Claudee : Everyone is missing the fact that closing the airline means R26 BILLION (in case young Japie is reading)in Govt guarantees will HAVE to be immediately be repaid.
A “new” SAA prevents this and that is why it has to be kept going even with a Piper Cub and 300 staff to “manage: it:
Think Swissair , thats precisely what they did : Govt Cant afford to close it down , never mind keeping it going : They have Checkmated themselves !

I’m not sure this is cast in stone. We do know that even a functioning SAA, like Eskom, can never generate the cash to pay off their government guaranteed debts (at least without Zim type inflation). BUT, the creditors should not have a problem if the debt was taken over by government in an SAA shell and was continued to be paid down. Just needs a bit of negotiation and waaaay cheaper for SA than keeping the theft pit of SAA flying.

So I think it is more than that; pride, ideology, showing off black pilots, employing ANC family and cadres, syphoning money into the ANC party and its elite’s pockets most likely.

What an absolute charade. Fat comrades do not want to loose their freebie flights. Money is no object – as long as we can milk the tax payer. Time for the tax payers to make a stand. Without the goodwill of the productive sector of society these parasites are nothing. Nothing.

The question is …. How do we implement this?

Corporates are scared. They play the tune…. not whats right or wrong.
I cannot think of 1 corporate that stood up to JZ…. except that lady from Sygnia … Magda Wierzycka.
Now, she had guts. or I would call it balls.
She put all the males in the corporate sector in her back pocket and stood up. Now thats leadership.

Well this is the perfect indication that the ANC will not reverse course. The productive citizens get robbed of their efficiency from a parasite that cannot dissolve.

I am speechless.

….like another commentator aptly responded, in a previous article in 2019, when SAA received yet another bailout:

“…ag jissis tog!”

It is just incredible how this (and all other) SOEs continue to cost us – the taxpayers. I am getting tired of being a law abiding citizen that has to work hard, day-in-day out, follow all the rules etc. Seemingly, politicians and other connected people play by an entirely different set of rules. Sick n tired.

In a democracy like ours what to do? The only legit option is the ballot. Sweet dreams MasterYoda.

Something of the sort was expected, as it’s typical of our Gov’t to behave in such a way!

I think I now know why these bright spark’s keep on changing things like the names of our streets, etc… It’s because they probably believe that by changing the name, the destination that it will take you to, changes as well!!!


Government can’t run government!! How do you expect them to run an airline?? Haven’t they proved their inept??

…Govt doesn’t need to prove that they can “run” anything profitably. All they have to do is to ensure their THEFT is mostly going unnoticed.

So far, the ANC exceeded with “flying” colours 🙁 (pardon the pun)

Am just as confused…

One can’t simply “start a new airline” from the wreckage of the old one. The “old” SAA has to be liquidated first & creditors paid a certain cent of the each R1. Planes sold, workshops sold, all staff gone/retrenched.

A “new” SAA cannot lay claim on the “old” SAA’s assets. Not theirs.

The “new” SAA would then NOT own any aircraft (they’d either have to start fresh with a fleet, either owning or leasing). The existing aircraft fleet would be sold off to pay creditors. The ‘new” SAA will not own it.

Staff. You cannot just take the old staff across and call it the “new” airline, and retain the payroll system (and everyone’s agreed remuneration rates). The “old” staff have to be all retrenched due to business closure process, and a “new” airline has to recruit new staff from scratch.

Same with the office space. The old team has to vacate existing offices. The “old” company closed, remember. Office space will have to be re-negotiated, or operate from different premises.

Etc etc.

Otherwise, it’s effectively THE SAME operation…with painted-over branding. Same team / same planes / same management. Same govt fingers in the till.

This “new” airline just a ploy to screw creditors, and “reset” their debt to zero.
It’s like a person acquiring say a new Hyundai, through Wesbank or Stannic vehicle financing. While owing the bank, then one remove the Hyundai emblems from the grill, rear hatch, and steering wheel boss…and replace them with VW badges. Then I tell the bank, I owe you nothing, since this is a VW and not a Hyundai (despite that the VIN & chassis number is still that of Hyundai on registration papers.)

Michael : Read up how SwissaIr did it : I think thats SAA,s Model:
You “ringfence”the Old SAA Debts etc etc so that the New SAA carries on (some of same planes staff/offices etc) but with a Properly Financed Initial Balance Sheet :
Regrettably Being RSA , they still wont make it , as they are tied to The Anc and Unions Coat tails :
It worked for Swissair but has no hope in RSA :

R21 billion and counting …. for how much longer can the ANC/Luthuli House bleed the economy dry?

Why is the majority so stupid as to continue to vote these leeches into power?

Sigh ….

In other words the money will be stolen from taxpayers yet again. “Stolen” as in “We don’t want to fund this ANC crap”.

End of comments.





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