• Gupta fallout

    KPMG is still losing staff and clients due to Gupta fallout, according to insiders.

  • Stimulus reaction

    Ratings agency Fitch says SA's stimulus plan is unlikely to boost growth significantly.

  • The Ramaphosa Plan

    The president said on Friday that the work "starts now". He wasn't wrong, writes Pieter du Toit.

Loading...

SAA answers tough questions on negative cash position

2017-08-04 09:41

SAA executives as well as the Minister of Finance have given feedback in Parliament on the airline's performance and turnaround plans.

SAA chairperson Dudu Myeni. (Pic: Gallo Images)
LIVE NEWS FEED

Jump to
bottom

Last Updated at 09:27
04 Aug 13:53

To recap:

Finance Minister Malusi Gigaba has told a briefing of the standing committee on finance ahead of the SAA board’s official presentation on the national carrier’s finances and performance plan on Friday that the appointment of a permanent CEO at South African Airways is only one step in bringing back the airline to financial health.

Acting CEO Musa Zwane also told the committee that the executive management of SAA has agreed to a 5% pay cut as acknowledgment of the financial difficulty the airline is currently experiencing.

ANC MP Pinky Kekana suggested the SAA become more proactive with its route networks and take back some of the routes it has given to other airlines.

Gigaba, who was widely expected to divulge the amount National Treasury would provide to SAA, said on Friday that he won’t make any announcement about a cash injection for the struggling national airline, but will wait for the mini budget in October.

SAA CFO Phumeza Nhantsi also admitted that the airline was not able to pay its dues to suppliers as a result of the liquidity crisis at the national carrier.

Nhantsi said salaries are being prioritised and “arrangements” have been made with suppliers. “We couldn’t pay all our suppliers 100% at the end of July – only some of them. The simple answer is we didn’t pay 100% of the monies,” she said.

The SAA also listed the Public Investment Corporation as a possible funder of R6bn in 2018.


04 Aug 13:35
The briefing has ended!

04 Aug 13:33

Finance Minister Malusi Gigaba told Fin24 after the briefing that National Treasury did not give input into SAA's Corporate Plan and that the funding assumptions were made by SAA alone.  

He also reiterated that he did not want to disclose any further information about a capital injection before the medium-term budget policy statement in October.


04 Aug 13:16

SAA lists PIC as possible source of R6bn funding in 2018

SAA has stipulated the Public Investment Corporation (PIC) in its Corporate Plan as a possible source of funding.

In the Corporate Plan for 2017 to 2022, which was tabled by National Treasury in Parliament on Friday, SAA lists its funding requirement for a five-year period which will amount to R13.1bn. Listing the “sources and uses” of funds, the PIC was listed as a source of funding of R6bn for the 2018 financial year.

Alf Lees from the Democratic Alliance (DA) asked Finance Minister Malusi Gigaba during a briefing between SAA and the standing committee on finance to clarify if the PIC was indeed listed, to which Gigaba answered in the affirmative.

He pointed out however that nothing was cast in stone.

Fin24 earlier reported that National Treasury was considering the PIC as an equity partner to fund the loss-making SAA after Gigaba said during a question-and-answer session in the National Assembly that SAA’s consideration of a minority equity partner may not necessarily be a private one, but that it could also be a public entity.


04 Aug 13:01

SAA fails to pay all its suppliers amid liquidity crisis

South African Airways (SAA) was not able to pay its dues to suppliers at the end of June as a result of the liquidity crisis at the national carrier, Parliament heard on Friday.

Democratic Alliance MP Alf Lees asked SAA chief financial officer Phumeza Nhantsi what the airline’s situation is with regard to payment of salaries and suppliers.

Nhantsi said salaries are being prioritised and “arrangements” have been made with suppliers.

“We couldn’t pay all our suppliers 100% at the end of July – only some of them. The simple answer is we didn’t pay 100% of the monies,” she said.


04 Aug 12:14

Gigaba: There is low confidence among investors on how we’re managing our SOEs

Responding to a question from the Democratic Alliance’s (DA) Alf Lees about SAA’s R2.2bn bailout at the beginning of July, Finance Minister Malusi Gigaba acknowledged that it was not the “best option” government would have wanted.

National Treasury invoked section 16 of the Public Finance Management Act (PFMA) on July 1, giving SAA a R2.2bn lifeline to repay its loan to Standard Chartered Bank who had withdrawn its loan facility to the airline.

“We [National Treasury] found ourselves in such a situation that we had to invoke this decision. The risk of triggering a domino effect with regard to other debts SAA has and other state-owned entities (SOEs) was quite high.

"And the risk would remained heightened, as there is low confidence among investors on how we’re managing our SOEs.”

Gigaba said for this same reason it was paramount that Eskom decided to put its CFO Anoj Singh on special leave to appease the Development Bank of Southern Africa who had threatened to withdraw its loan facility unless action was taken against Singh.

“If Eskom didn’t do this, the other Class One lenders would have also been triggered to recall their loans and this could have plunged us into a financial crisis,” he said.


04 Aug 12:08

Gigaba says SA must wait till mini-budget for SAA bailout announcement

Finance Minister Malusi Gigaba said he won’t make any announcement about a cash injection for struggling national airline SAA, but will wait for the mini-budget in October.

Gigaba was expected to divulge the amount that National Treasury would provide to SAA during a meeting with Parliament’s finance committee on Friday. SAA is under severe financial strain with a cash shortfall of over R500m and losses amounting to close to R1.5bn for the year to date.

In addition, a number of SAA’s loans are maturing at the end of September this year, which totals R6.7bn. “I’m not making an announcement now,” Gigaba said on Friday. “The [process] of the medium-term budget policy statement (MTBPS) needs to be respected and I need to follow the right process. But don’t worry, we’ll come back and brief you about what we’re proposing and how to move forward.”


04 Aug 11:13

SAA urged to take back routes it gave away to other airlines

ANC MP Pinky Kekana said SAA should be more proactive with its route networks and take back some of the routes it has given to other airlines.

“BA for example flies from Johannesburg to Durban and take our routes. Those are sustainable routes that can assist our national carrier and prevent it from going down the drain.”

Kekana called on Finance Minister Malusi Gigaba to convene with Transport Minister Joe Maswanganyi to review the route allocation. “Because this is what radical economic transformation is supposed to speak to,” she added.

“These guys (other airlines) are eating up our [profits]. Let’s review them. We can’t be apologetic and watch our airline go down the drain.


04 Aug 10:45

Iraj Abedian, chief executive officer at Pan-African Investments and Research Services in Johannesburg on new SAA CEO: “In an organisation as complex as SAA, one person in a leadership position is not going to be sufficient if he hasn’t got 100 percent support from the board.” 

He told Bloomberg by phone “many of the problems at SAA over the past 10 years have emanated from the board.”


04 Aug 10:35

DA's Lees says Myeni accused him of spying on her, demands apology

Alf Lees, Democratic Alliance spokesperson on finance, demanded an apology from SAA chairperson Dudu Myeni on Friday, saying she accused him of “spying” on her.

During question time at a parliamentary briefing where SAA presented on its financials and its corporate plan, Lees said he was approached by Myeni after a previous briefing on June 27 with the national carrier when she had made the accusation.

At the said briefing, Myeni was the only board member present, which gave rise to speculation that she didn’t have the support of her fellow board members.


04 Aug 10:25

SAA execs agree to 5% pay cut

The executive management of SAA agreed to a 5% pay cut, as acknowledgment of the financial difficulty the airline is currently experiencing, said Musa Zwane, acting CEO.

Zwane told Parliament’s standing committee on finance that SAA managed to avoid incurring costs of about R35m per month in the past quarter while “revenue enhancement” initiatives will yield additional revenue of about R13.6bn over a five-year period.

The initiatives include network and schedule changes and pricing segmentation.


04 Aug 10:10

OPINION | 8-point plan for new CEO to turn-around SAA

South Airways at last has a new CEO - Vuyani Jarana. Just as with Mark Barnes at the Post Office, this represents another move away from cadre deployment to appointing someone with genuine business skills, acumen and proven experience. It can only be beneficial to the ailing national carrier, as it attempts its ninth turnaround strategy in a little over a decade.

Mr Jarana inherits a massive debt and maturing loans of almost R20bn over the next five years. His appointment is likely to coincide with yet another cash injection by Finance Minister Malusi Gigaba to keep the airline flying by providing salaries and urgent debt repayment due within weeks.

The fundamental issues for the national airline remain – notwithstanding the new appointment of a respected new CEO. Critical choices will have to be made.

Daniel Silke offers an 8-point plan to turn SAA around...


04 Aug 10:00

New CEO only one step in turning SAA around - Gigaba

The appointment of a permanent CEO at SAA is only one step in bringing back the airline to financial health, said Finance Minister Malusi Gigaba in Parliament on Friday.

Gigaba made a few introductory remarks during a briefing of the standing committee on finance ahead of the SAA board’s official presentation on the national carrier’s finances and performance plan.

“The new CEO important as it is, is only one step in a stream of decisions that we’ll need to make to address the challenges at SAA,” Gigaba said.  Gigaba said unless firm internal controls are established at the airline, it is likely to encounter the same problems over and over again.


04 Aug 09:45

The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (SACCA) will march to South African Airways (SAA) on Friday over a request for pay increases, just as the entity has revealed it has run out of cash, meaning they may not even get their basic salary.The unions are marching on Friday to hand over a memorandum to SAA officials.

This will coincide with the SAA board’s appearance before the standing committee on finance in Parliament. Here, the board will face tough questions regarding its negative cash position and a requirement for a R13bn cash injection over three years.


04 Aug 09:45

Vuyani Jarana has been appointed as the new CEO of SAA. Jarana, 46, has been head of Vodacom’s enterprise division since 2012 and was previously chief operating officer at the mobile company.

National Treasury said in a statement Jarana will commence his duties after his current employer has officially released him. Jarana was praised for the transformative role he has played at Vodacom.

"Mr Jarana has, among others, transformed and positioned Vodacom Business as a growth engine of Vodacom, growing its contribution to group service revenues from under 10% to 25% over three years."


04 Aug 09:44

Finance Minister Malusi Gigaba will in all likelihood announce a R15bn bailout to South African Airways (SAA) when the national carrier reports back to Parliament on its performance on August 4.

In the presentation that will be given to Parliament, SAA says it is a going concern and that it has managed to extend its maturing debts to three years.

However, a document detailing SAA’s loans and maturing dates show that a total amount of R6.783bn of debt matures by the end of September. The document lists 15 loans, which amounts to R14.6bn, with the maturity dates ranging from end-September 2017 to 30 April 2022.

In the list of loans provided by SAA, the names of the lenders are not being disclosed, which means the financier could in fact be government.


04 Aug 09:42

Give new SAA boss a chance - Gordhan

Former finance minister Pravin Gordhan said new South African Airways (SAA) chief executive Vuyani Jarana should be given three to six months to turn around the ailing airline without interference.

Looking back to his role in steadying the out-of-cash state-owned entity, Gordhan said “it took us a long time to put together a new board for SAA”.

“We failed to get a new chairperson who is more experienced and effective at leading,” he said, a criticism of incumbent Dudu Myeni, who is seen as a close ally of President Jacob Zuma.


04 Aug 09:42

The SAA board will face tough questions from members of Parliament this morning about its negative cash position and a requirement for a R13bn cash injection over three years.  

Finance Minister Malusi Gigaba will also be in attendance this morning to give feedback on the airline’s performance and turnaround plan.  

Meanwhile, the airline late yesterday appointed its first permanent CEO since November 2015 in the person of Vuyani Jarana, former head of Vodacom’s enterprise division since 2012 and was previously chief operating officer at the mobile company.


Jump to
top

 
 
 

Company Snapshot

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

What do you think of President Cyril Ramaphosa's economic stimulus plan?

Previous results · Suggest a vote

Loading...