SAA’s advert for R16 billion funding demands emergency parliamentary meeting

29 August 2016

South African Airways’ (SAA) advert for a tender of R16 billion in yesterday’s newspaper reinforces the urgent need for Parliament to intervene and to have an emergency meeting with SAA.

I have therefore written to the Chairperson of the Standing Committee on Finance, Yunus Carrim, to reconsider my original request for an emergency meeting with SAA on Wednesday this week. 

SAA’s call for tenders to provide R 16 billion in loan funds to be available by the end of October, a mere two months away, indicates the desperate financial position that the SAA board under the leadership of Dudu Myeni finds itself.

The airline has had more than a year to restructure its loan funding but has instead arrogantly pressumed that the State would capitulate and provide the additional guarantees of R5 billion that Myeni had demanded first of then Minister Nene and then of Minister Gordhan. The botched attempt to restructure funding through BnP Capital with its outrageous fee of R49.9 million seems to have been the only other attempt to find alternative funding. 

The reported repayment of R250 million due to Standard Bank is clearly just the tip of the iceberg,  as much of the balance of the loans taken against the R 15 billion State guarantees are also likely to be reaching maturity and will require repayment in the normal course of business. Ms Kwinana, who resigned from the board last week, was clearly not exaggerating the very real danger of SAA being liquidated. 

I remain of the view that SAA must be placed under Business Rescue in terms of section 131(1) of the Companies Act of 2008. This will obviate the need for the national airline to be bailed out yet again by the South African taxpayer and will put the airline into the competent hands of business rescue practitioners and take it out of the hands of President Zuma’s close friend, Dudu Myeni and her apparently delinquent board now only constituted of four directors. One wonders which director will be the next to jump ship given that Ms Kwinana, despite her very close relationship with Ms Myeni, has jumped.

It is high time that the financial woes at SAA are urgently addressed. Thousands of jobs that will be lost if SAA is allowed to continue this downward financial spiral. 

Issued by Alf Lees, DA Deputy Shadow Minister of Finance, 29 August 2016