Johannesburg - Finance Minister Nhlanhla Nene has given the SAA board until December 21 to conclude the agreement to swop the purchase of 10 A320s for a lease of five A330s from Airbus.
In an unprecedented move, Nene wrote to SAA board chairwoman Dudu Myeni last week, instructing her to implement the transaction structure for the swop in line with the approval that he had already granted.
Nene said the swop should be communicated to Airbus and the agreement be reached without further discussion.
Business Report is in possession of a copy of Nene’s four-page letter to Myeni.
“A copy of the agreement signed by both parties (SAA and Airbus) is to be shared with my office within 24 hours of it being concluded,” wrote Nene. “I will not entertain any further discussions or applications relating to amending the transactions structure.”
Nene’s strongly worded letter to Myeni comes in the wake of deteriorating relations between him and the SAA board on the Airbus swop deal.
The SAA board and the Treasury were not immediately available for comment.
But insiders claim that the board was unlikely to co-operate with Nene and was exploring further avenues for discussion, despite the fact that Nene has made it clear that he would not entertain further engagement on the Airbus deal.
The SAA board spent a large part of Thursday night discussing Nene’s letter and weighing up different options on its next move. An insider said the board members were surprised at Nene’s tone in the letter and the ultimatum to conclude the deal as they believed that they could talk to him.
“To say we were caught off guard by the letter is an understatement,” said the insider. “The minister could have called us to explain our stance, instead of shutting the door on our faces. He would have seen that we also want what is in the best interest for SAA.”
In his letter, Nene said he stood by his earlier assessment that severe negative consequences would arise should further delays result in Airbus reverting to the existing A320 purchase agreement that was currently in place.
Nene said SAA would be required to recognise significant impairments as the aircrafts were delivered and the national airline would be required to pay the outstanding pre-delivery payments of nearly $40 million (R573.64m).
Nene argued that Airbus had already demanded the amount as a result of enforcing its rights in terms of the existing contract and that the exemption that had already been provided from the obligations was only for a 30-day period until December 21.
“As SAA currently does not have the funds to meet these payments, there is a high risk of the airline defaulting,” said Nene. “A default on the government guarantees would have much broader ramifications for the sovereign and the country as a whole.”
Nene said should the board proceed with the amendment without his permission, the move would be viewed as tantamount to financial misconduct.
BUSINESS REPORT