Selling off assets won't save SAA

The Democratic Alliance (DA) is unsurprised by media reports today that South African Airways (SAA) is contemplating selling off assets as a result of the mounting debt the airline faces.

The reports further indicate that SAA will lose R6 billion in the 2018/19 financial year meaning that SAA will lose R822 million more than the already massive loss of more than R 5 billion projected in the SAA Corporate Plan.

In the latest corporate plan, SAA is set to receive government bailouts to the tune of R13 billion over the next two years, however, the additional losses will mean that the taxpayer will have to cough up more, at least R14 billion in total.

The DA has for the last three years maintained that SAA has been and is bankrupt and that the airline cannot trade its way out of debt.

Despite the government guarantees of R19,1 billion that are available to SAA, commercial banks are apparently unwilling to lend more to SAA.

The “new” board and executives of SAA are unable to implement a robust plan to cut the bloated costs, root out rampant corruption and grow sales and on top of this meet debt servicing and repayment obligations.

Last month, the Ministers of Finance and Public Enterprises issued a joint announcement that SAA will be transferred to Public Enterprises. This move, as the DA warned, has not made a difference to the fortunes of SAA.

Now more than ever before there is clearly a need to:

Put SAA into business rescue;

Appoint a business rescue practitioner who has experience in the airline industry and who will make the hard financial decisions to stop the losses;

Allow SAA to recover under business rescue and be privatised, failing which to let SAA go to the wall and be liquidated.

The state of SAA and other state-owned enterprises must be placed squarely at the feet of the failing ANC. Under their watch, state entities have disintegrated because of corruption and gross mismanagement. The DA, through Parliament, will do all we can to rescue these entities from further ruin.

Statement issued by Alf Lees MP, DA Shadow Deputy Minister of Finance, 23 September 2018