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Cape Town - The embattled South African Airways (SAA), which is draining the fiscus, must be placed into business rescue because it is a ticking time bomb, Democratic Alliance deputy finance spokesperson Alf Lees told Fin24 on Sunday.
SAA recorded a loss of R1.5bn in 2015/16 which spiked to R4.7bn in 2016/17. Alf said it seems almost certain that the airline will record an even higher loss in 2017/18 than in the previous financial year.
READ: PIC may buy into Telkom to save SAA
The DA wants National Assembly to debate the financial position of state-owned airline. DA chief whip John Steenhuisen is working on getting the debate approved in the programming committee of Parliament.
"SAA is a colossal drag on the fiscus and highlights the drain that state-owned enterprises (SOEs) present to our country, with a staggering R780bn in guarantees already extended to SOEs. This debate of national importance on the ticking time bomb that is SAA is more imperative now than ever before."
Two of SAA’s major lenders, Standard Chartered Bank and Citibank, declined to extend the duration of their loans.
SAA has R6.785bn in government guaranteed debt, which has to be paid by the end of next month. This includes R1.761bn that is due to Citibank.
"There is next to no hope that any of the lenders will roll the debt over," said Lees.
He added that government guarantees are being used to fund losses, instead of measures to increase revenue.
"The company is bankrupt, if we want it to survive - and I don't think many people want to see it crash - it must be placed into business rescue."
This, Lees said, would then entail the airline being managed by a business rescue practitioner who is not encumbered by politics.
"The board would then be suspended and the company must be robustly managed, which would broadly involve massive cost cutting and improving revenue streams," he suggested.
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