Saa bailout
SOE-bailouts fuel heated debate in Parliament
The National Assembly has on Thursday debated the financial burden of sustaining non-profitable parastatals and how government can re-appropriate funding.
SAA is in desperate need of the multibillion-rand bailout, but the airline’s sole shareholder is still undecided on how to go about raising this money.
The financially strapped airline has accepted over 3,000 applications from a total of 5,000 employees.
Tito Mboweni was challenged by the opposition Democratic Alliance to say whether or not the government intended providing SAA with a further bailout during debate on National Treasury’s budget vote at Parliament on Thursday afternoon.
On Thursday, the rescue practitioners announced the cancellation of some international, regional and domestic routes in a bid to cut costs at the cash-strapped airline.
MPs wanted to know whether the DBSA had caved in to political pressure to make the R3.5 billion loan to SAA, but DBSA chief investment officer and acting CEO Paul Currie’s response was an emphatic no.
Last week, the wholly-owned government entity has pledged the lifeline injection to the struggling national carrier.
South African economic growth has slowed over the last decade. Debt has climbed rapidly as the government scrambles to plug a widening budget deficit and bail out state firms plagued by mismanagement.
SAA is fighting for its survival after it entered a form of bankruptcy protection in December and cancelled some flights because of cash shortages.
Government officials are scrambling to work out how they can provide R2 billion ($138 million) of funds they promised when SAA entered a form of bankruptcy protection last month.
In a notice on its website, SAA says it is putting some of its aircraft up for sale to accommodate new Airbus aircraft the company has added to its fleet.
While the airline said the losses incurred during the strike were not the only factor contributing to this latest decision it did speed up the process.
Here's a brief history of the airline which was on Wednesday ordered by President Cyril Ramaphosa to enter into voluntary business rescue.
SAA will face tough questions from members of Parliament’s standing committee on public accounts during their oversight visit to the embattled airline’s headquarters on Thursday.
The National Assembly held a debate of national importance to discuss the recent week-long strike at the struggling airline.
The national carrier said the probe was launched after it received information that some individuals, including senior executives, were involved in acts of criminality.
SAA has debt of about R12.7 billion, consisting of R9.2 billion of legacy debt and a R3.5 billion working capital facility provided by banks.
In the meantime, interim chief financial officer Deon Fredericks said the airline also approached three additional lenders, which include international funders for short-term help.
SAA failed to make a profit since 2011 and has been operating at a loss.