PARLIAMENT - South African Airways (SAA) believes lenders will agree to extend R6.8m in loans that mature in September because the troubled airline has heeded their advice to appoint a permanent CEO, chairwoman Dudu Myeni told MPs on Wednesday.
"We are hoping that the CEO will start work on the first of September," Myeni said in response to questions from members of Parliament's Standing Committee on Public Accounts (Scopa) after chief financial officer Phumeza Nhantsi said the company was operating on the assumption that the lenders would agree to longer terms.
Scopa chairman Themba Godi had for the second time in the meeting asked whether SAA had any basis for an assumption it was making on a key aspect of its finances.
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Myeni and acting CEO Muza Zwane replied that one of the key concerns raised by SAA's creditors in negotiations to ensure an extension was the absence of a permanent chief executive. They said the company had made good on the commitment to appoint one by naming Vodacom Group executive Vuyani Jarana as its new head.
Earlier, Godi had asked how SAA could have based its turnaround strategy on the hope that it would receive a capital injection of R8 billion from government. Zwane conceded that it was an assumption as there had been no commitment from the state to extend that amount.
"Yes, it was an assumption, not an agreement and that assumption was not fulfilled." Earlier this month, SAA executives told Parliament's standing committee on finance that the airline would need R13 billion from the state to resolve its liquidity woes. Finance Minister Malusi Gigaba has agreed in principle to recapitalise SAA but said he would only make an announcement in this regard in his medium-term budget policy statement. On Wednesday, Deputy Finance Minister Sfiso Buthelezi confirmed that National Treasury saw an obligation to recapitalise the airline, which is on the brink of bankruptcy.
"National Treasury will never allow SAA to go under," he said, but added that there had been problems at the airline which it did not wish to see repeated. On Wednesday afternoon, Democratic Alliance MP Alf Lees told the National Assembly he had obtained a secret document that showed that government was planning to finance a R10 billion lifeline to SAA primarily by selling shares in Telkom.
Lees made the claim while Deputy President Cyril Ramaphosa was answering questions from MPs and asked whether Cabinet had approved the sale. Ramaphosa responded obliquely by saying juggling state assets was a complex exercise that required a holistic approach.
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The Scopa meeting focused on irregular and wasteful expenditure in the 2015 financial year but MPs expressed frustration at the lack of detail provided by the airline and Godi became visibly irritated when Myeni appeared to blame SAA's problems on the fact that it had annual debt interest payments of R1.2 billion and hired most of its aircraft at a cost of R3.5 billion a year as it owned only nine.
He asked whether the airline saw cash injections, as opposed to loans underwritten by the state, as an imperative in its business model.