DA rejects obscene R30 billion SAA business rescue plan
17 June 2020
The Democratic Alliance (DA) categorically reject the proposed business rescue plan by the South African Airways (SAA) Business Rescue Practitioners (BRPs), Les Matuson and SiviweDongwana, that relies on a R32.65 billion bailout from Government.
The DA will write to the Minister of Finance, Tito Mboweni, to ask him to do what is right and oppose this ridiculous bailout. We will also write to the Competition Tribunal to request an investigation into this proposed SAA bailout as we are of the view that it violates the Competition Act, as the airline will get an unfair competitive advantage over the other South African airlines – none of which have been granted bailouts but remained profitable.
The business rescue plan, not surprisingly, calls for massive bailouts and reflect massive losses over the next three years. The total cash requirements over the three years would amount to:
Lenders - R16.4 billion
Staff retrenchments - R 2.2 billion
Unsecured creditors - R 0.6 billion
Secured creditors - R 1.7 billion
Unflown ticket claims - R 3.2 billion
Mango - R 1 billion
SAA Technical - R 1 billion
Air Chefs - R 0.15 billion
Trading losses (SAA only) - R 6.4 billion
Trading losses : Mango/SAAT/Air Chefs - unknown
TOTAL CASH REQUIRED - R 32.65 billion
SAA has been bankrupt for the past decade, relying on bailout after bailout as a succession of poor CEOs squandered all hope of profit and goodwill with poor business practice.
Of the limited options left for SAA, another bailout must not be on the list. Liquidation is the only realistic option for SAA at this point. In no way, shape or form should the government be handing out R33 billion bailouts to a bankrupt blackhole of an entity that has not contributed anything to our economy for ten years.
South Africa is neck-deep in the middle of a pandemic. There is an economic meltdown, and we are facing a humanitarian crisis as millions of people are desperate and wondering how to provide food for themselves and their families - never mind the added worry of other bills to pay. Some have not been paid for months and millions may lose their jobs if they haven’t already.
The fact that the BRPs think that spending this obscene amount of taxpayers’ money on an airline that is long past its last legs as the way forward is utterly ludicrous. It’s inhumane that it would even be considered.
Issued by Alf Lees,DA Member of the Standing Committee on Public Accounts, 17 June 2020