SAA bailout comes with strict conditions

Fuel, labour and procurement are some of the areas Treasury is demanding SAA start cutting costs on.

Picture: Facebook.

JOHANNESBURG - Treasury says while it has granted South African Airways' (SAA) application for a bailout, it demands more financial responsibility from the airline.

Yesterday, Finance Minister Pravin Gordhan met with the SAA board where he announced the approval of a R5 billion going concern guarantee.

But the loan comes with strict conditions which call for financial sustainability over the next five years.

While the cash strapped SAA will now receive a bailout, it will also have to start finding cost cutting measures in line with one of the conditions set by Treasury.

Fuel, aircraft ownership, labour and procurement are some of the areas Treasury is demanding the airline start cutting costs on.

Gordhan also wants the board to report back regularly on its progress.

In the past two years, SAA has failed to produce its financial statements which has forced Treasury to create communication protocol that will allow it to keep track of developments.

Despite the strict conditions, the decision to grant the loan guarantee has been met with resistance by opposition parties.


Yesterday, SAA chairperson Dudu Myeni said the airline is in the rights hands and the fact it has met all its obligations, revenue is improving and that new routes have been developed, proves this.

Myeni was speaking after meeting with a group of concerned citizens, which included Black First Land First leader Andile Mngxitama and president of the Progressive Professionals Forum, Mzwandile Manyi, yesterday at the airlines offices.

While Myeni assured South Africans SAA is in good hands, the Democratic Alliance is challenging the rationality of her reappointment in court.

The party believes Myeni had a disastrous performance at the airline and claims under her, SAA received at least R15 billion from tax payers just to keep the airline going.

Myeni, however, said the airline has never received cash injection from government.

"We get given a paper, which is a government guarantee. We service those loans ourselves monthly, it's an expensive money that we're servicing. We've never received any cash injection from the government and that's what South Africans do not know (sic)."

She said no one should ever claim she put the airline in a mess and that she inherited the airline as it is.

Additional reporting by Clement Manyathela.