Gordhan’s “New SAA” – Treasury should reject any funding request

14 July 2020

The DA is calling on Minister of Finance, Tito Mboweni, to exercise his authority in terms of the Public Finance Management Act, to deny any request for a financial bailout to fund Minister Pravin Gordhan’s proposed ‘new SAA’.

In a shocking move that shows disdain for South Africa’s imploding fiscal situation, Minister Gordhan’s Department of Public Enterprises has announced a ‘new SAA’ and the appointment of Phillip Saunders as the new CEO.

With SAA’s creditors expected to vote in favour of the Business Rescue Plan tabled by the Business Rescue Practitioners (BRPs), South African taxpayers will now have to fork out another R16.6 billion to fund this vanity project. This is on top of R36.9 billion in taxpayer cash bailouts that have been spent over the years, including R19.1 billion in government guarantees.

Treasury and Minister Mboweni have repeatedly said they will not be extending any further bailouts to SAA. Now is the time for him to stand by his word and refuse to be bullied into financing Gordhan’s multi-billion pet project, which is sure to send South Africa over the fiscal cliff.

The projections made by the BRPs in the business rescue plan that the ‘new airline’ will be able to turn a profit in the fourth year of operation are ludicrous and show little grasp of the current and future realities facing the global airline industry. Still, they will have passed the buck, having earned R30m+ off the backs of taxpayers.

The airline sector has all but collapsed due to the Covid-19 crisis and will not be able to generate any profits for a long time to come. Despite this reality, Gordhan is still intent on saddling South Africa with a financial albatross that the country can ill-afford to carry.

Mistaking the albatross for the phoenix is indicative of a recklessness borne of a penchant, regardless of the cost, for state-owned vanities. It should be rejected outright. The DA expects Treasury and Minister Mboweni to show leadership and act in the interests of all South Africans by rejecting Gordhan’s insanity which is destined to cost our country dearly when scarce funds could be best employed to fight the scourge of Covid-19.

Issued by Ghaleb Cachalia, DA Shadow Minister of Public Enterprises, 14 July 2020