DA calls for a debate of national importance on SAA’s financial position

The DA will call for a debate of national importance on the financial position of South African Airways (SAA).

SAA recorded a loss of R1.5 billion in 2015/16 which spiked to R4.7 billion in 2016/17. At the current rate, it seems almost certain that the airline will record an even higher loss in 2017/18 than in the previous financial year.

Investors are already not willing to invest because of the poor state of SAA. In June, Standard and Chartered’s unwillingness to roll over their loan to SAA caused a R2.203 billion bailout and recent revelations confirm that Citibank will not extend a R1.8 billion loan due at the end of September.

The total loan amount maturing at the end of September amounts to R6.785 billion. There is next to no hope that any of the lenders will roll the debt over.

Finance Minister, Malusi Gigaba, has therefore approved a R10 billion bailout for 2017/18 which does not even take in to account the R23.3 billion in bailouts and guarantees to SAA over the past decade. However, given that the corporate plan and memo indicate that there will be a R13 billion bailout from 2017/18 to 2019/20, it can be assumed that there is a R3 billion bailout planned for either next year or the year thereafter.

The airline has R7.8 billion in debt maturing between 2019 and 2022. Assuming that the R13 billion will be the last bailout would mean that the airline could pay its debt that matures between 2019 and 2022 which is entirely untenable. Therefore, another bailout beyond 2019 is highly likely.

SAA is a colossal drag on the fiscus and highlights the drain that State Owned Enterprises (SOEs) present to our country, with a staggering R780 billion in guarantees already extended to SOEs. This debate of national importance on the ticking time bomb that is SAA is more imperative now than ever before.

Statement issued by Alf Lees MP, DA Shadow Deputy Minister of Finance, 27 August 2017