Banks extort taxpayers to bailout SAA over and over again
28 January 2019
The Democratic Alliance (DA) has written to the CEO’s of FNB, Standard Bank, Nedbank, ABSA and Investec to request that they consider the decision of making it possible for SAA to survive long enough until the taxpayer is forced, yet again, to bailout the national carrier in the 2019 budget.
Vuyani Jarana, SAA CEO, reportedly indicated that the banks have committed another R3.5 billion in loans to SAA in order to keep SAA flying until the end of March 2019. The interesting point is that the banks have apparently not yet formally approved these taxpayer underwritten loans to SAA.
Without the connivance of lenders such as banks over the past five years, SAA would not have been able to continue trading and South African taxpayers would have been saved R15 billion in bailouts already paid to SAA with another minimum of R16.7 billion still to come over the next two years.
Whilst the R15 billion in bailouts to SAA is hard earned taxpayer money, what should not be discounted are the opportunity costs of services that could have been supplied, or economy boosting infrastructure that could have been built.
It has been over a year since Jarana took over as CEO of SAA. During this time he has fiddled on the fringes but has not been able to slash the massive costs, such as bloated and un-competitive employee costs, that result in the ongoing losses.
The DA remains of the view that the only way to possibly save SAA would be to put it into business rescue. This would go hand-in-hand with the government drawing a line on any further loans based on government guarantees and withdrawing all government guarantees not yet utilised by SAA. Sadly, in order to avoid a cross-default on government guarantees, the South African taxpayer would be forced to honour the obligations of government guarantees already utilised by SAA.
Issued by Alf Lees, DA Deputy Shadow Minister of Finance, 28 January 2019