Parliament has learnt that SAA needs another R4.8 bn bailout immediately after the recent R10bn bailout received in December 2017. Read the article below, and have your say and People's Assembly will send your response to the relevant Parliamentary committees.
Parliament’s Standing Committee on Public Accounts (SCOPA) was told on 24 April that SAA needs another R4.8 billion immediately. This is after National Treasury gave a R10 billion bail-out to South African Airways in December 2017 so that it could be deemed a going concern on 31 March 2017 by the Auditor-General.
Asked if the R4.8 billion was required to prevent SAA from grinding to a halt, SAA CEO, Vuyani Jarana, told SCOPA it was needed immediately, keeping in mind that SAA has no credit line, there is a cash ban and a gap between revenue and expenses, so there is a need for capital to sustain the operations. He said the R10 billion paid by government in December 2017 had R7.6 billion going to pay lenders and R2.4 billion was supporting working capital requirements.
Out of the 64 aircraft that the SAA Group has, nine are owned and the rest are leased. Long haul carriers are being used for domestic routes which is not ideal and all the domestic routes were loss making even though they were full. The balance sheet could not support the purchase of new aircraft. At present, SAA was paying only the interest on its debts and not the principal.
At the meeting, Deputy Finance Minister, Mondli Gungubele, said the grave financial crisis at SAA had resulted in the Finance Minister commissioning the Deputy Minister and a Treasury team to hold weekly meetings with SAA. He said SCOPA would be briefed on the Long-Term Turnaround Strategy which aims for SAA to break even in 2021. He stressed that the timing was not right for government to consider cutting its ties with SAA as it would cost R60 billion to list it. Another option was to throw it away but the implications would be no less than R60 billion as well. Government had accepted that it is worth it to stick it out until it breaks even in 2021.
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