Picture: Sumaya Hisham/Reuters/African News Agency (ANA)
Picture: Sumaya Hisham/Reuters/African News Agency (ANA)

Cash-strapped SAA’s future in limbo

By Siyabonga Mkhwanazi Time of article published Jan 18, 2020

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Johannesburg - The situation at SAA remained unclear on Friday night with threats the airline could grind to a halt after the government was left scrambling to secure billions to keep it afloat.

This week it was indicated that the government would have to inject R2 billion by the weekend to ensure the airline meets its financial obligations.

Finance Minister Tito Mboweni had earlier indicated they were working on that.

In an intervention late last year, when SAA was put into business rescue, the government said it would inject R2bn and another R2bn would come from lenders.

SAA referred inquiries to business rescue practitioners on Friday night. The spokesperson for the business rescue practitioners, Louise Brugman, could not be reached for comment.

However, the unions had warned that the situation at the airline was precarious, with thousands of jobs on the line.

SAA this week denied it was selling its Airbus fleet to secure the money. It said it had put nine planes on sale as part of its plans to get a new fleet.

SAA was said to be getting billions of rands from the sale of Airbus planes.

Acting chief executive of SAA Zuks Ramasia said it was necessary to dispose of the old fleet.

“After we received the four new Airbus A350-900s, it has become necessary for us to sell our older models to accommodate the new models with superior features such as the quieter cabin, relaxing in-flight environment and more extra-legroom seats in economy class and lie-flat beds in business class,” said Ramasia.

“The decision to sell the aircraft has nothing to do with the business rescue process. For some time we had planned to replace our four-engine aircraft with new generation and more efficient aircraft as part of our fleet renewal programme,” she said.

The National Union of Metalworkers of South Africa and SA Cabin Crew Association last year went on a strike to force the airline to increase salaries for workers.

The national carrier had complained that the eight-day strike had cost it R52 million a day.

But after the intervention of the Commission for Conciliation, Mediation and Arbitration, the parties resolved to end the strike.

However, SAA’s books did not look good and the government announced it would be put into business rescue.

This was an attempt to avoid the liquidation of the company.

But the failure of the government to inject the required capital has raised fears with some of the unions.

SAA has not posted a profit since 2011 and it has relied on bailouts for many years. With the latest debacle the official opposition has called for the government to sell it.

Political Bureau

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