SAA in line for R4bn boost as it enters rescue process – Gordhan

R2bn of which will come from government.
'It must be clear that this is not a bailout,' Pravin Gordhan has said. Image: Bloomberg

South African Airways (SAA) is likely to get a R2 billion boost from the government and another 2 billion from existing lenders as it enters rescue proceedings from December 5, a minister said on Thursday.

“It must be clear that this is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline,” Pravin Gordhan, minister of public enterprises, said in a statement.

SAA, which has not made a profit since 2011 and has depended on government bailouts, suffered an employee strike last month that forced it to cancel hundreds of flights and pushed it to the brink of collapse.

Read: SAA to be placed under voluntary business rescue

SAA lost over R10.4bn in past 2 years – documents

On Wednesday, a deputy minister, declined to be identified due to the sensitivity of the matter, told Reuters he had received a letter from the secretary of the cabinet which said President Cyril Ramaphosa had called for a change of approach on SAA and instructed the government to put the airline in a “voluntary business rescue process”.

Outlining what is expected from the process – which Gordhan described as the “optimal mechanism” to restore confidence in SAA as it seeks a future equity investor – Gordhan said the R2 billion provided by existing lenders will be guaranteed by the government and repayable in future budgets.

The government, via the national treasury, will provide another R2 billion in a “fiscally neutral manner” with the full recovery of capital and interest on existing debt not impacted by the rescue proceedings.

In a business rescue process, a specialist administrator takes control of a company with the aim of rehabilitating it to improve its chance of survival, or securing a better return for creditors than they would receive from liquidation.

“This initiative demonstrates that the government will undertake the necessary bold steps in order to reposition its assets in such a way that they do not continue to depend on the fiscus and thereby burden taxpayers,” Gordhan said.

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2bn comes from the tax payer. The bailout for SAA have started.

It’s ironic how these politicians play with words again – “It must be clear that this is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline,” and also – ‘This initiative demonstrates that the government will undertake the necessary bold steps in order to reposition its assets in such a way …’. This is like a Dad to his son:’go mow the lawn’, son: ‘no I won’t’, one day later son: ‘I’ve decided to mow the lawn voluntarily. This proves that I will take the necessary bold steps ….!’ They really treat us like morons.

Time to use your collective economic power. Refuse to fly SAA. Get your friends, family, colleagues, guests, international guests and colleagues to boycott SAA.
Flight Centre had the cahoonas to do it. Hats off to them!

I envy the other International Airlines incl Comair and Safair!

They now have a Squadron of…Exclusively Highly Trained, Exceptionally loyal, Very Experienced, Very Brave (weather), Very Intelligent, Quick thinking…Airline Pilots that can land in just about any Weather or Runway the safety minimums allows.

Their Professionalism and Skills will be sorely missed. We Salute You!!

Note:Im not an Airline Pilot,but a Passenger.

These stupid people just don’t realise it will fail regardless of bailing it out.

I thought they said no more bailouts. Lies as usual.

Mmmm. They do realise it will still fail. This is their last attempt to take a little more for the looters and make it look like they are preserving jobs and a lost cause airline.

Look -it is NOT a bailout if the ANC use the magic words like”fiscal neutral manner.” Like calling ANC corruption “state capture”

As I understand it, it’s NOT a bailout…it’s a “provision” 😉

Like the person receiving a punch to the face in a brawl. “No. you have not been punched, it’s only “ruffle up”. (…yet you’ll still have a black eye, either way…)

Or when you got a hiding at the schoolmaster back in the day: “No, that was not a thorough hiding, it’s only punishment or corrective steps”. (…but your bum was burning, either way…)

Maybe Dirk Herman, Irvin Jim and Dudu Myeni can fund this absurd bailout.
SAA should have been taken out of its misery ages ago.
LIQUIDATE IT ASAP !

Like trying to scoop water with a sieve.

from the tax payer who in return receives nothing…I would have liked a couple of free tickets but now to scared to fly SAA…

Minister Pravin – just when is it enough of our money that is being thrown into a black hole? You are filling the feeding troughs and fuelling the gravy train instead of seeing to the real needs of this country. Any money you pour into the black hole is going to the pockets of the looters.

Pravin Gordan is a Communist (SACP) … just to remind everyone.

Jamnadas is clueless but the best thing is that he has to shut up now as he has lost central control of SAA. The BRP calls the shots now and Jamnadas must simply pay up using health and security budgets to fund the parliamentarians favourite free airline.

What is sad is that the airline is actually very nice-has a lovely feel, friendly staff, is getting new aircraft and had the place not been stolen silly it probably would have been a success.

The unions will now claim that had they not been forced to go on strike, business rescue would not have been necessary.

and still they have the audacity asking us to support them!

R2bn out of state coffers is fiscally neutral!!! Okay, so which dept budget are they raiding here? BUT it is still taxpayer money, or have the politicos passed the hat around to start their own private donation fund?

Govt put the ‘new’ Companies Act into place and it states that a company cannot trade if it is insolvent (simply put). Even a ‘voluntary’ application for business rescue requires court approval and can be challenged. This new bailout is to convince the courts to allow for the BR attempt.

The “existing lenders” either have a gun to their head from govt, or a separate guarantee has been issued by govt re their entire loan amount – if the latter then they are effectively being bribed.

This is rubbish! How can you throw more cash and guarantees at the airline, yet no BRP has been appointed? Without whom a decision cannot be made. This is clearly a slight of hand by gov’t who still refer to SAA as an ‘asset’ & continue to dictate T’s & C’s of what they require from this arrangement!

It’s BS…pure & simple!

If this is the degree to which the govt vacillates on a totally non-core SOE, wait to see the size of the victory by the unions when it comes to Eskom.

The chance to set a clear marker is forever lost and no more crying wolf from govt quarters…

And to think Pravin is being paid a salary by South African taxpayers to be this useless. In the (US) private sector he would have been fired long ago.

Why would any South African (shareholder) taxpayer agree to paying the salary of all these useless individuals?

That’s why I’m not surprised why a record number of shareholders are giving up their “shares” and emigrating their families and “shareholding” offshore.

Everyone calm down. The government has said that it is “fiscally neutral” and that the rest of the R59bl that taxpayers have loaned SAA since 1999 is fully recoverable plus interest. I, for one feel alot better, after all, they have never let us down in the past.

I know it seems almost meaningless considering all that is going on, but could the media across all platform, stop referring to these payments/bailouts/loans as being government/treasury/parliament approved, almost making it sound as if it was done in their personal capacity, via some unknown entity.

Instead how about including the words “taxpayer funded”, everytime a state entity makes an announcement regarding another bailout/loan, as a small sign of respect to anyone who is listening, reading or watching and who knows how much they are sacrificing, and in return getting so little. Just a thought.

” ….will provide another R2 billion in a “fiscally neutral manner” with the full recovery of capital and interest on existing debt not impacted by the rescue proceedings.”

Please help with “fiscally neutral”. Sort of reminds me of being a little bit pregnant…..

At some stage SA will start printing money to cover all these “fiscally neutral “zeros.

Can I pay “fiscally neutral” tax to SARS, please ?

If it walks like a duck, talks like a ducks, poops like a duck – it’s a duck. THIS IS ANOTHER BAILOUT.

That sir, IS exactly that: a bailout!!

(We understand you, there’s little other way to finance the artificially created & unsustainable system of AA/BBBEE)

Yes, NOW is the time to show our power:

Lower our taxes, African Bank pay back the money, scrap e-toll,

THEN we will start using SAA again.

STV — Sensible Tax Revolt

It is Christmas guys, the parasites need to fly to exotic places for a holiday, those that are not flying need to feed at the trough.

Come on, where is your generous festive spirit!!

Taxpayers don’t panic. It seems there are two possible outcomes:

– SAA, Mango and SA Express will be restructured whether unions like it or not.
– They will be liquidated.

Lets see if the marginal tax rate is reduced once this process is completed.

I am paying boggerol taxes in the meantime. I refuse to, until I see action that is in the right direction.

They are going into “voluntary” Business Rescue because bailouts don’t work.

Before they even start the process the very thing that don’t work they keep doing at the taxpayers expense.

Again the abnormally dormant condition of mind of these guys come to mind.

My neighbour was a pilot for SAA on the overseas routes. He saw the writing on the wall a year ago and found another job in the UK flying for a Chinese airline. I am happy for his sake. But I suppose his story is the same as that of millions of other South Africans.

The last theft of taxpayers money so the cadres can stash some more cash before the airline closes its doors. Fiscally neutral of course !

SAA needs R4 billion in cash just to be able make out a case for business rescue.

It will be one of the airline’s few assets.

The business rescue practitioner must rescue what is left of that R4 billion, once it is given to SAA.

On the fact of it, it is a bad plan, perhaps the worst plan ever.

That’s funny. That’s the definition of a bailout in most countries! Only in S.A. is a bailout typically just chucking in more money into an insolvent organization, being run poorly with no strings attached. Well in that case, hopefully this is just a regular bailout by evryone else’s standards, Pravin!

End of comments.

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