Secret SAA bailouts

Cemair CEO Miles van der Molen said South African Airways (SAA) would likely receive further bailouts despite the government promising to fund the airline no longer.

In May, the National Treasury revealed that SAA received R50.7 billion in direct government funding from 2007 to 2022. R48.4 billion was received in the past ten years.

The total direct recapitalisation amount for SAA from 2007 until the airline was placed into business rescue in December 2019 was R22.8 billion.

However, even more was spent on the struggling state-owned airline since the business rescue process was announced.

An additional R16.4 billion was allocated over the 2020 Medium Term Expenditure Framework period to repay government-guaranteed debt.

R10.5 billion was also made available to SAA in 2020/21 to implement the business rescue plan following the 2020 Medium Term Budget Policy Statement.

The Minister of Finance announced an additional R1 billion allocation in the February 2023 budget speech for SAA to settle outstanding business rescue process obligations.

Despite the billions in bailouts, SAA did not succeed in becoming a sustainable airline and wasted taxpayers’ money.

To save the airline, the Department of Public Enterprises reached a deal with the Takatso Consortium to acquire 51% of SAA.

Public Enterprises Minister Pravin Gordhan regularly said the deal is basically done, but, to date, SAA is still run by the state.

Speaking to Biznews, Van der Molen said South Africans should take the state’s promise that there will be no more SAA bailouts with a pinch of salt.

He said during previous bailouts, the government always said it was the last time and that SAA must become sustainable.

“Every bailout SAA came with the phrase ‘this was the last one’. I am not sure why the last bailout would be any different,” he said.

He added that SAA bailouts were not always clearly defined as such in the state’s financial reporting.

“We saw many non-disclosure items. Money was transferred from Transnet to SAA on some basis, and it came out well after the fact,” he said.

“We have seen in the past that South African Airways bailouts have not been as transparent as it should be.”