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Gigaba will engage with FNB CEO over SAA boycott

Aug 15 2017 17:00
Matthew le Cordeur

Cape Town – Finance Minister Malusi Gigaba will engage with FNB CEO Jacques Celliers following his declaration that he will no longer fly with South African Airways (SAA).

“Minister Gigaba and Jacques have a very good relationship,” the minister’s spokesperson, Mayihlome Tshwete, told Fin24 on Tuesday.

“We will engage with him to understand his concerns, but frankly now is the time where SAA needs more support, not further isolation.”

This follows a tweet by Celliers on Monday, in which he said he will no longer fly SAA because “this abuse has to come to an end”.

“As from today I'm not flying on SAA anymore. Instead I'll be supporting the honourable alternatives,” he said.

FNB spokesperson Lwazi Stuurman told Fin24 on Tuesday that Celliers “has nothing further to add on the matter”.

Responding to the tweet, Democratic Alliance MP Alf Lees told Fin24 on Tuesday that “this is a brave move by a bank CEO”.

“We hope that the message will be that SAA must no longer be a burden on taxpayers,” he said. “It would be very helpful if other bank CEOs, including those whose banks are owed money by SAA, took similar positions.”

Lees does not fly SAA, but said the DA does not currently boycott SAA.

This follows a segment on Carte Blanche on Sunday evening, which focused on the South African Cabin Crew Association (Sacca), the union that laid charges against members of the SAA board for theft and corruption to the tune of more than R1.86bn.

Sacca announced on July 27 that it would be opening cases of corruption, theft and contravention of the Public Finance Management Act against executives and the board of SAA.

Those that will have cases opened against them include acting CEO Musa Zwane, CFO Phumeza Nhantsi, head of operations Zuks Ramasia, general manager of marketing Aaron Munetsi, and Kim Thipe.

"What is going on is major corruption in terms of the reports that we have furnished to all media houses today stating the irregularities that are experienced by all employees of the company... they are looting in excess of R1.8bn," said Sacca's Feroze Kader.

SAA spokeperson Tlali Tlali and Finance Minister Malusi Gigaba's spokesperson Mayihlome Tshwete said they would revert back with comment on Tuesday.

The state of SAA's finances

Documents seen by Fin24 show that the airline went into a negative cash position in July, meaning SAA might not be able to pay its workers, let alone give them a raise, which Sacca is calling for.

SAA had a net cash outflow of R568m in July, which is forecast to increase to R936m in August. The forecast then sees a R918m cash outflow in September, a R134m cash outflow in October, a R183m cash outflow in November and a R679m cash outflow in December.

SAA received a R2.207bn lifeline from Treasury in June to repay its loan to Standard Chartered Bank. This followed the R5bn going concern guarantee it received from Treasury in September 2016, after a new board was appointed.

SAA hasn’t made a profit since 2011 and has not had a permanent CEO since 2015. However, Treasury revealed last week that Vodacom executive Vuyani Jarana was appointed its new CEO and would assume duties once his current employer releases him from his service.

SAA told Parliament last week that it will continue on its loss-making path for the foreseeable future with losses of R2.8bn expected in 2017/18.

SAA chief financial officer Phumeza Nhantsi disclosed that in addition to the loss in the current financial year, the airline will take a further hit of R1.8bn in 2018/19. She sees SAA as possibly making a profit in 2019/20.

Gigaba told Parliament in July that SAA has to pay lenders R15.963bn in 2017. The R2.207bn bailout was a part of this total amount. That leaves another R13.755bn that must still be paid, with cash SAA does not have.

This is because Gigaba revealed SAA has already used R18.624bn of its R19.144bn government guarantee allocation. This means government has to find the above cash elsewhere for the state-owned airline that is bleeding R370m of losses every month.

In other words, it has no choice but to sell its own assets to fund the shortfall.

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