SAA’s R10.5bn bailout does not cover aircraft lessors, other creditors
By Alexander Winning
JOHANNESBURG – Debts to aircraft lessors and some creditors of South African Airways (SAA) are not covered by the R10.5 billion government bailout, administrators said, raising the prospect that future state budgets would have to keep paying out for SAA.
The government allocated the latest cash injection to state-owned SAA in last month's Mid-term Budget Policy Statement (MTBPS) tabled in Parliament by Finance Minister Tito Mboweni for a restructuring plan that has been awaiting funding since July.
Administrators said on Thursday that the R10.5bn was for “initial commitments”, while R1.7bn owed to lessors and R600 million to creditors from before the airline went into administration nearly a year ago would be paid over three years from next year.
Kgathatso Tlhakudi, director-general of the ministry responsible for SAA, said the idea was that the government would pay the amounts to lessors and longstanding creditors but that it was still working on a solution.
The government is wooing investors for a partnership deal to reduce SAA’s dependence on stretched public finances. “The ultimate aim is to remove the burden … from our shoulders,“ Public Enterprises Minister Pravin Gordhan told legislators this week.
Talks could be complicated if it does not pay the outstanding debts.
SAA has not made a profit since 2011 and is expected to lose at least R6bn over the next three years.
Its administrators said on Wednesday that the plan was for R2.8bn of the latest bailout money to go on employee-related payments, R2.7bn on recapitalising subsidiaries including Mango Airlines and R2bn on working capital.
Another R2.2bn would repay those who had bought tickets but could not fly and R0.8bn was for creditors who had funded SAA since it went into administration.
SAA's operations were mothballed in late September when funds ran low.