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Cape Town – It is time to go back and dig into the history of South African Airways (SAA) to uncover the reasons for its problems, Ndabaka Gcwabaza (ANC), whip of Parliament’s standing committee on appropriations said on Wednesday.
“State departments must open up and be honest with Parliament – from Transnet to Public Enterprises and National Treasury. We must ask what the reasons were for SAA’s problems,” he said during a briefing of the committee by the Financial and Fiscal Commission (FFC) on the SAA debt relief and recapitalisation.
In the view of Gcwabaza, the FFC’s presentation to the committee did not explain much.
“Before you come to tell us of SAA’s (bad) position in 2017, you must tell us what happened since the (ex SAA CEO) Coleman Andrews period. We want you to go back and dig into history – be honest with parliament – dig to see what the problems were. We must not skirt around these issues. We want to hear the root causes,” he sternly told the FFC.
“We have to trace the management issues back to where it started. It is about the role of the management and boards over these years. We don’t hear much about that. We hear about one board chair namely Dudu Myeni, but we are not told of the approach of all the others over that whole period of time – even before her.”
In the view of Gcwabaza, Myeni is being “demonised”, but he thinks behind that is hidden the real truth about SAA.
“Those who scream SAA must be privatised must forget it,” emphasised Gcwabaza.
Yvonne Phosa of the ANC, chair of the standing committee on appropriations, said during the briefing that the committee thought it needed to be informed about the SAA debt and recapitalisation so that and interventions by the committee could be “informed and so that we can produce a quality report to achieve a quality outcome for this committee. We want to be able to make the right interventions”.
“We can only achieve more if we are knowledgeable – one can only take quality decisions when one is informed – and not do thumb sucking. And engage with all stakeholders,” emphasised Phosa.
“We are preparing to also hear SAA on these matters. We want to see all roleplayers together to avoid the blame shifting game. It is the role of the committee to look at the spending by government.”
Government’s increasingly stepping in to help SAA, according to the FFC. It pointed to “instability in leadership, flawed governance and inefficient operations” as having contributed to SAA’s poor performance.
Long-term loans by the airline reached R12.7bn in 2015/16 with R6.2bn of total long term loans expected to reach maturity within a year. Given the poor financial health of SAA, financiers have been reluctant to extend the maturity date of loans, resulting in government intervention to keep SAA afloat, according to the FFC.
At the end of June this year government helped SAA by paying R2.2bn owed to Standard Chartered Bank and R1.76bn to Citibank in September via the National Revenue Fund. SAA also received R1.2bn for immediate working capital requirements.
If SAA had defaulted on its loan repayment to Citibank and Standard Chartered, it would have triggered a call on its government guarantee, including loans received from other lenders totalling R13.75bn.
Alf Lees of the DA disputed the FFC’s version that SAA paid the R1.76bn it received over to Citibank.
According to the FFC government’s funding of the R5.2bn to SAA directly from the NRF will likely increase the budget deficit and further push back fiscal consolidation over the medium term.
By contrast Comair, for example, turned a R297m profit in 2016, Ethopian Air turned a R3.4bn profit in the same year and Emirates turned a R4.4bn profit in 2016/17.
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