SAA receives R3.5bn from DBSA

The business rescue practitioners can immediately draw down R2bn of the facility.
The business rescue team has again assured passengers, travel agencies and airline partners that they can book air travel on the state-owned airline ‘with confidence’. Image: Shutterstock

After two weeks of uncertainty, South African Airways (SAA) has been able to secure R3.5 billion in funding from the Development Bank of Southern Africa.

This was confirmed by its business rescue practitioners on Tuesday.

The rescue practitioners can immediately draw down R2 billion of the facility, the remaining amount required for the process that government had been struggling to raise.

“Funding for the restructuring phase after the business plan is adopted is being considered by potential funders,” said the practitioners in a statement.

The state-owned airline was placed under voluntary business rescue in December, a process that required R4 billion in post-commencement funding. An amount of R2 billion was raised in state-guaranteed loans from lenders but government had been slow in finding the remaining R2 billion cash injection, which was supposed to be raised in a “fiscally neutral manner”.

Read: What might a rescued SAA look like?

A week ago, SAA cancelled 38 “low demand” domestic and international flights in order to save money despite assurances from the business rescue practitioners, two days prior, that flights would remain operational. 

News of the cancellation first appeared on Flight Centre’s Twitter page prior to SAA making a formal announcement.

Read: SAA rescue supremo faces long to-do list

The business rescue practitioners have again made assurances that “passengers and travel agencies and airline partners can book air travel on SAA with confidence”.

 

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   25

You must be signed in to comment.

SIGN IN SIGN UP

Unbelievable. The business is insolvent finish & klaar

They borrow billions for cash flow when their revenue is in free-fall

What will happen in 3 months time when they need more money, and more, and more

Ace has assured the hard working tax payers that their money will be used to bailout SAA and for thst matter all SOE’s. The Government will not shut it down but rather face more downgrades

Well done to you snd your comrades ACE. March’s downgrade to Junk is imminent

What then? Will you look at the IMF to then bailout the insolvent South African Government?

You will have to. Your Government is going to start running out of tax payers

Seve Roux. You are spot on when you say – “Your Government is going to start running out of tax payers”. People are leaving in droves but not officially emmigrating, so that will just confuse the bean counters at SARS too.

In agreement. Just to add: even when Govt coffers are nearing the bottom, and while the tax base is shrinking…placing a limit in SARS collections……there’s still PLENTY OF MONEY around in SA.

SA has been not been called an African country with “deep capital markets” for nothing…

Hence, BEFORE the ANC govt will crawl to the IMF (…which will be as good as “game over” for the ANC regime’s rule), our ‘deep capital markets’ of about R4+trillion in retirement funds, are now ripe for the picking 🙁 You will get your govt “IOU” soon enough…

Very little extra income tax needed…..as there’s a mountain of savings to be accessed under soon to be announced ‘prescribed assets’ (to further feed the inefficiencies of the artificial BEE/AA exercise economically). First the govt will start with a small %….the ANC’s ‘Stalingrad’ approach to everything. Nibble small bits off. (or slowly boiling the frog analogy).

How did they manage the last two weeks? They should have been left to learn how to rescue this thing themselves. They have not been running an airline just an ATM getting filled by us every time it is empty. The flying gets on on its own.

What development are they funding ?

The development of bonuses, cadre deployment and more contracts for friends and family. That you see is development ANC-style.

And who exactly is going to fly SAA. Not me. I’d rather use Emirates etc. Only govt officials. Loss loss loss.

So government blinked first. But hats off very clever move. DBSA is effectively for all intents and purposes a tool/ SPV of the Treasury.

Not only did SAA get its R2 billion, it got a spare back up R1.5 billion. My guess this will be described as a ‘separate arrangement’ between DBSA and SAA. Government will come out and say they are still in the process of securing the R2 billion to inject as promised. So considering how much SAA needs to stay afloat, did they just pull a rabbit and buy a lot more time. Government can still announce R2 billion in a months time from now and SAA goes from 38 flights down last week, to suddenly being flush an extra R5.5 billion.

To the man in the street and the countries tax rands ultimately it is all the same.

Something i do not see being discussed, or am reading the wrong press. But who are the rescue practitioners – i mean who are the key industry experts on the team. Airlines and their business are highly specialised and need highly skilled people that understand, each airline is different based on geographic location, limitations of same, political realities relevant in that domicile, labour relations etc – then looking at that bigger picture be able to turn it around and extract maximum returns from what they have – if no experts and just a herd of CAs/ CFAs/ MBAs/ economists – then this is a waste of time. Would you let your accountant cut your hair with ice skates?

The BRP is most likely just another cadre deployee. Thanks to the DBSA the trough has been temporarily upgraded to cater for the additional “consumers”

Where is this gonna end up?

That is only half the headline…..

The other half is….

DBSA receives R3.5bn from SA Tax Paying citizens to bail out SAA.

SAA will receive no more bailouts…and in other news DBSA receives government bailout due to disastrous investment in SAA. You have got to love the logic here…

The ANC don’t want the SOE’s to go down and is using tax payers’ money for bail-outs so that these enteprises could be looted.

Ag jissis tog

good one Danie! Post of the year!

…die bliks#mse d@nners! 🙁

…..the “Rescue Bank of Southern Africa”!

Can you please explain what the Development Bank of Southern Africa are and where do they get their moneys from?

The spin doctors have been at it again! Only the stupid and misinformed (which taxpayers, corporates, rating agencies, etc. aren’t) would believe that a state owned bank can be considered as ‘fiscally neutral’.

It’s the same choice of words that allowed an erroneous Tweep to be made by govt regarding the NHI funds to come from “taxes”, “not directly out of your pocket”

T.I.A…!

And still no financials have been done in 3 YEARS ????
In the real world, how can anyone get funds without financials..
What a theft of our money. When is it going to stop??

I see a VBS coming, Development bank dishing out to non payers, just like that parasite JZ.

Stop complaining in times of crisis…Everyone is stating the obvious.. Start looking for ways to make money from the situation…

COMAIR share price is at R2.70 … with a decrease in Mango sales (owned by SAA) along with a decrease on domestic flights with SAA people will move towards Kulula….
This is an easy win.. We are looking at around R4 share price within the next 6 months at most

Agree, Comair (‘COM’) should benefit long-term. Add some to your share portfolio.

(…just worried if SAA will be able to pay any of the R1trn CompCom settlement, if ever)

I wonder which part of DBSA’s mandate states that they must provide funding to organisations with a track record of failure…

Isn’t DBSA the same finance institution that’s funding Trade and Industries: 100 Black Industrial Program?
This program has been running for a few years (brainchild of Rob Davies) but not a peep from government about any progress or state of loan repayments to DBSA!
Finance journos, PLS try to find out – we really deserve to know!

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: