Cape Town - South Africa is so heavily in debt that it simply does not have the money to continue bailouts of state-owned enterprises (SoEs) such the South African Airways (SAA), the Democratic Alliance said on Saturday.
The settlement agreed to by SAA with Comair for SAA to pay Comair R1.2 billion in damages plus legal costs had added to the cash crisis at the national carrier, DA spokesman Alf Lees said.
What this settlement agreement of R1.2 billion plus legal costs meant was that it added at least another R1.2 billion to the taxpayer bailouts required to keep the bankrupt SAA in business.
In order to be able to continue trading and flying its aircraft until the end of March 2019 SAA recently had to borrow another R3.5 billion on top of the R14 billion that SAA already owed, and of which it was understood that some R9 billion plus the recently borrowed R3.5 billion, amounting to R12.5 billion, were repayable by the end of March 2019. These massive borrowings remained an albatross around the necks of taxpayers despite taxpayer cash bailouts of R15 billion paid to SAA over the past two years, he said.
The SAA corporate plan reflected continued losses of R7.1 billion for the 2018/19 and 2019/20 financial years. The DA believed that these projected losses were optimistically low and that unless the losses were funded by further taxpayer bailouts the airline would be forced into liquidation.
"In the first place there is no logical reason for SAA to be in business at all. The national carrier is still clearly cursed by maladministration and corruption, is over-staffed, and bankrupt. In the second place South Africa, and thus South African taxpayers, is facing a massive cash crunch largely because of the failing ANC-created Eskom crisis, but also because of the ANC-created crises throughout the government.
"Finally, there are private airlines that have no drain on taxpayers’ funds that are ready and able to immediately fill any gaps that may arise if SAA were to be shut down. South Africa is itself so heavily in debt that it simply does not have the money to continue bailouts of SoEs such as South African Airways," Lees said.
In order to at least save some of the jobs at SAA as well as to minimise the taxpayer bailouts, and as Finance Minister Tito Mboweni considered allocations of precious funds in the 2019 budget, the DA urged him to make the hard decision to place SAA under business rescue.
"Sadly, with business rescue taxpayers will likely have no option but to meet the government guarantee obligations very foolishly made by the ANC government on behalf of SAA," Lees said.
African News Agency (ANA)