Government guarantees give SAA a soft landingComment on this story
Yesterday SAA chief financial officer Wolf Meyer argued that the airline had not received any bailouts from taxpayers in the past five years. The last time SAA received a capital injection from the government was in 2007, when it was given R8.45 billion.
But in 2012 SAA received a R5bn guarantee from the government and accessed a R550 million bank facility for fuel and short-term commitments using that guarantee on top of an existing R1.3bn subordinated loan from the government.
Meyer disputed the notion that the airline was being bailed out all the time and said the guarantees that people saw as bailouts had only allowed SAA to get expensive loans.
SAA was asked by the parliamentary portfolio committee on public enterprises if it would continue to operate without the surety that these guarantees provided.
It seems the answer was a clear no. SAA can justifiably dispute the effectiveness of guarantees in getting it out of the financial mess it is in. If it is allowed to source capital funding at higher rates, then this is a drawback to the company because it could be using those excessive interest charges to patch elsewhere in its operations.
But when one looks at the fact that, in the past 20 years, SAA has received a total of R16.8bn in different government packages, as per figures presented by DA spokeswoman for public enterprises Natasha Michaels, it is safe to conclude that it has relied on the fiscus.
The Department of Public Enterprises earlier this year expressed the government’s view that it agreed with SAA that guarantees alone were not enough and would perpetuate a cycle of bailouts. In 2012, it proposed a recapitalisation package of up to R6bn.
But one will have to wait and see if that is all the government gives to SAA if the recapitalisation package, whether R6bn or higher, is approved.
After six weeks of striking for a “living wage” the Association of Mineworkers and Construction Union (Amcu) leadership has finally tabled a revised demand to employers in a bid to resolve the crippling platinum sector strike.
Amcu president Joseph Mathunjwa told journalists yesterday that companies now had three years to reach the R12 500 minimum wage demand, for which the union has halted underground production since January 23.
Yesterday’s announcement marks the first move by Amcu in the wage negotiations that began in the second half of last year. Mathunjwa said the union’s revised offer would give “breathing room” to the platinum producers.
Amcu is leading the biggest legal strike in the platinum industry in democratic South Africa involving 70 000 members at Anglo American Platinum (Amplats), Lonmin and Impala Platinum.
Companies have stood their ground and said the R12 500 was unaffordable. They have instead offered a three-year wage deal in which employees will receive an increase of between 9 percent and 7.5 percent.
Employees earn a basic wage of between R5 000 and R5 700 and, if met, the Amcu demand would require mean salaries to increase by about 150 percent.
The union has also previously argued that the payment of exorbitant salaries to chief executives was unacceptable while members who genuinely needed a living wage were ignored.
Undoubtedly Amcu members are beginning to feel the pinch as, after losing one month’s salary, they are left to deal with creditors on their doorsteps.
The industry has lost R6.7 billion in revenue, according to a statement by the employers.
The problem is that if platinum prices do not rise and the rand does not weaken, the companies will not be able to afford to operate the mines or employ mineworkers.
Amplats has already shut down three unprofitable mines and laid off thousands of people.
Edited by Banele Ginindza with contributions from Londiwe Buthelezi and Dineo Faku.