Sell off 'alcoholic' SAA and fire Myeni, Maimane tells Gigaba | Fin24
 
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Sell off 'alcoholic' SAA and fire Myeni, Maimane tells Gigaba

Sep 28 2017 17:28
Yolandi Groenewald

Johannesburg - South Africa's national airline South African Airways (SAA) is like an alcoholic that demands money and promises to recover but never delivers, Democratic Alliance leader Mmusi Maimane said on Thursday.

"The only way to help this alcoholic, is to cut off its funds," Maimane told journalists in Johannesburg, adding "SAA is a bottomless pit".

Maimane urged Finance Minister Malusi Gigaba to sell off the airline, after first stabilising and professionalising it. He said the "insolvent and bankrupt" national carrier should be put into business rescue as soon as possible.

A buyer should then be found to take it over, 

The DA leader, flanked by the party's finance spokesperson Alf Lees, said SAA chair Dudu Myeni must be held accountable for her role in managing the airline. The DA would write to the Public Protector to investigate what role she had played in the "institutional decay and poor governance" of SAA. 

He added that Myeni should be removed from the airline's board immediately.

Maimane said the crisis at the airline was "fast reaching boiling point", with SAA's debt repayments of R6,9bn due this Saturday.

"Despite this urgent situation, National Treasury has yet to reveal where this enormous amount of money will come from," he said. 

Sunday Deadline

On Wednesday Cabinet was meant to deliberate on how to save SAA from its latest cash crisis, after at least one creditor insisted it be paid by Saturday. The Treasury's director general Dondo Mogajane said Cabinet would offer possible solutions after the meeting on Wednesday. 

Cabinet has not yet provided feedback. 

SAA has to pay back Citibank R1.8bn by Saturday September 30 as part of its debt obligations. As of Thursday, there were no indications that the US-based bank would grant the airline a reprieve.

In total SAA owes R6.9bn of debt that has to be paid by the end of the September. In July, the government had to provide it with R2.3bn from an emergency fund to pay what it owed to Standard Chartered, who had also refused to roll their debt over.

Mogajane previously said that, while the airline had R6.9bn of debt in total maturing at the end of the month, negotiations with lenders might lessen this amount, and give the airline room to breath.

Citibank’s debt needs to be paid on Saturday, however, and Wednesday’s Cabinet meeting was meant to hash out where the money was going to come from.

SAA recorded a loss of R1.5bn in the 2015/16 financial year, which rose to R4.7bn in 2016/17. It has already made a R1.3bn loss in the the current financial year to July.

On Thursday Maimane said that under Myeni, SAA has made a cumulative loss of R15.7bn over the past five years.

Treasury, meanwhile, has previously estimated that the national carrier will need an estimated R13bn bailout over the next three years. Mogajane said Treasury’s larger plan on how to recapitalise the cash-strapped airline would only be revealed during Finance Minister Malusi Gigaba’s mini budget on October 25

SAA, meanwhile, has already started cutting back on domestic routes in an effort to save money. 

R10bn bailout bill? 

Two weeks ago Treasury drafted a special appropriation bill to recapitalise SAA with a R10bn bailout, which it hopes to table in a special parliamentary sitting. 

But this option seems to have taken a backseat for now, as the finance ministry and Treasury try to hash out a solution for Saturday's payment deadline. 

Maimane said the R10bn bailout - if it goes ahead - would only provide a short term solution to the airline's funding woes.

"It will not provide working capital to fund the losses that National Treasury and the (airline's) latest turn-around plan indicate will continue for the next two years," he said. 

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saa  |  dan matjila  |  dondo mogajane  |  malusi gigaba  |  bailout  |  debt  |  funding
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