For the second time in two years the financially struggling SAA has asked for another government loan guarantee, which forced the state to postpone the submission of its annual report in Parliament in time for yesterday’s deadline.
The request for the new bailout comes two years after the Treasury approved a guarantee of R5 billion, which sparked a massive outcry from the competitors of SAA.
Public Enterprises Minister Lynne Brown wrote to Speaker Baleka Mbete to postpone the tabling of the reports until SAA had held its annual general meeting (AGM), where its financial statements will be endorsed by shareholders.
SAA is talking to the Treasury about the bailout.
However, Brown did not indicate how much the airline needed from the Treasury.
Now that Mbete has approved the postponement of the tabling of SAA’s annual report, the airline will submit the report in the next few months.
Brown said yesterday that she had asked Mbete for a postponement for both SAA and SA Express (SAX) as the latter also needed a cash injection. The Public Finance Management Act requires that state entities submit annual reports with audited financial statements by the end of September.
SAA and SAX failed to meet yesterday’s deadline.
“In respect of the two airlines, I have initiated a process to address the matters related to them. I intend to submit to cabinet in the not too distant future a proposal which will address the state’s ownership of airlines and the long-term financial viability of SAA and SAX,” Brown said.
“An inter-ministerial committee task team has been meeting for some time to discuss the various models and concrete proposals will soon be ready.”
In 2012, former public enterprises minister Malusi Gigaba found himself in a similar situation when he asked then Speaker Max Sisulu to delay the submission of SAA’s annual report.
The national airline needed a bailout of R5bn at the time and the Treasury agreed to the loan guarantee.
SAA was then able to hold its AGM, at which the board endorsed the financial statements.
The national carrier has been struggling in the past, and two years ago it suffered a financial loss of R1.25bn.
The airline stopped its process of purchasing 20 new aircraft after it put together a turnaround plan.
It embarked on other cost-cutting measures, including closing down loss-making routes in Africa and other parts of the world.
SAA tabled its turnaround plan in Parliament a few months ago, where it was endorsed by the portfolio committee on public enterprises.
However, yesterday’s announcement by Brown that she would not be able to table SAA’s annual report due to financial difficulties led to the DA calling on the National Treasury not to give SAA another bailout.
DA spokeswoman on public enterprises Natasha Michael said the state would be throwing its money away if it did so.
But Brown said that SAA and SAX would have to finalise various reports, including their audited financial statements, in due course.
In her letter to Mbete, the minister said the AGM of SAA would have to be held after all issues had been resolved.
“SAA has made an application for an additional going concern guarantee, the outcome of which is subject to a response from National Treasury,” she said.
Once the discussions have been finalised with National Treasury the AGM will be held before the end of March next year. SAX has 15 months to prepare its annual report before tabling it in Parliament.