Finance Minister issues warning to SAA
Nene warned the troubled airline that going ahead with a controversial Airbus deal will amount to misconduct.
CAPE TOWN - Finance Minister Nhlanhla Nene has issued a stern warning to the South African Airways (SAA) board that should it go ahead with a deal with Airbus without his approval, it would amount to financial misconduct.
Nene adds such malfeasance could be grounds for sanctions against the directors.
Yesterday, the minister turned down the board's controversial proposal to restructure a deal to acquire new aircraft from Airbus which involves bringing a middleman in on the transaction.
In 2002, the airline agreed to buy 20 A320 aircraft.
Ten were delivered.
However, with its finances in a desperate state, the national carrier negotiated a swap transaction, which included cancelling the purchase of the remaining 10 jets and entering into operating leases on five A330-300s.
But after the finance minister approved the transaction, SAA board Chair Dudu Myeni told him the board wanted to amend the deal to include a local third party financier.
On Wednesday, Treasury warned the proposed transaction would actually leave SAA in a materially worse off financial position.
"Although possible benefits may be realised through allowing the airline to continue to pursue an alternative transaction these were far outweighed by the high probability of a default on the government guarantees and the severe consequences thereof" Treasury said in a statement.
Nene has instructed the board to stick to the original swap transaction.
Airbus, meanwhile, says it's studying the minister's statement.