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New airline to replace SAA still a work in progress, says Gordhan

Public Enterprises Minister Pravin Gordhan briefed Parliament’s Standing Committee on Public Accounts (Scopa) and the Public Enterprises portfolio committee on the latest developments at SAA.

FILE: Public Enterprises Minister Pravin Gordhan. Picture: EWN

CAPE TOWN - Public Enterprises Minister Pravin Gordhan on Friday said that a new airline to be formed from South African Airways (SAA) was still a work in progress.

Gordhan briefed Parliament’s Standing Committee on Public Accounts (Scopa) and the Public Enterprises portfolio committee on the latest developments at SAA.

The committees were also expected to be briefed by the airline’s business rescue practitioners.

The meeting came after the national carrier finally submitted its annual financial statements to Parliament after more than two years.

The draft SAA financial statements for 2018 and 2019 were tabled to Scopa and showed losses of R5.5 billion in 2018 and R5.1 billion in 2019.

Gordhan said that COVID-19 had made matters worse for the airline.

“The closure of borders and international flights and in many instances domestic flights as well, the impact when one sums it up globally has been a devastating one,” Gordhan said.

He said a new airline was still far from being ready.

“What the new airline might need is still work to be done, and it is being done,” he said.

R7.7 BILLION NEEDED TO RESTRUCTURE SAA

Meanwhile, SAA’s business rescue practitioners (BRPs) told parliamentarians that it would cost R7.7 billion to restructure the airline.

The airline’s BRPs had previously suggested that there were only two options for the airline - liquidation or a structured winding down and the retrenchment of all its staff.

Business rescue practitioner Siviwe Dongwana said that working capital was provided to assist SAA when it went into business rescue.

"In terms of the amount of money that has been utilised by the airline from 5 December 2019 to 30 April 2020, we indicate that the total spend was R9.9 billion," Dongwana said.

Dongwana said that the rescue process included shutting down some routes that were loss-making. He said it was anticipated that the airline would have exhausted all of its funds by March.

Of the almost R10 billion used by SAA, 20% was paid to fuel suppliers and 60% went to salaries and other related costs.

WATCH: Gordhan briefs Scopa on SAA, SA Express developments