South Africa

Government gave SAA R33 billion – and got nothing in return

The government gave South African Airways (SAA) R33.1 billion over the last five years but received nothing in return.

This was revealed by the Public Enterprises Minister Pravin Gordhan during a parliamentary question and answer session.

Democratic Alliance (DA) MP Farhat Essack asked Gordhan how much SAA received in bailouts over the last five years and how much the government received in dividends.

Gordhan said South African Airways had faced significant financial and operational challenges in previous years.

This was partly due to several challenges, which, amongst others, included state capture and corruption.

As a result, its board placed SAA in business rescue on 6 December 2019 to restructure the company and strengthen its balance sheet.

This, Gordhan argued, was to ensure that a viable, competitive, and sustainable airline emerges.

The government gave SAA money as “post-commencement funding” to enable operations to continue while the business rescue plan was being developed.

This also enabled the repatriation of South African citizens stranded in other countries during the Covid-19 pandemic lockdown in 2020.

The business rescue plan was developed, and the creditors adopted the business rescue plan on 14 July 2020.

The airline was later restructured, staff numbers were reduced, compromises were reached with creditors, and the business rescue was exited on 30 April 2021.

The airline recommenced operations in September 2021, with very limited local and international routes.

South African Airways has not produced financial statements since 2018. The financial statements for the 2022/23 financial year are still with the Auditor-General.

This means South African taxpayers, who have been funding the airline beset with corruption and mismanagement, cannot see how their money was spent.

However, Gordhan revealed that the struggling airline cost taxpayers R33.1 billion over the last five years.

The government did not receive any dividends in return. This means the money was essentially wasted.

Below is a summary of the government funding SAA received. The money included working capital, settling bridging finance and debt, and business rescue fees.

YearMoney SAA receivedDividends paid by SAA
FY2019/20R 5.5 billionR nil
FY2020/21R18.2 billionR nil
FY2021/22R 6.8 billionR nil
FY2022/23R 1.6 billionR nil
FY2023/24R 1 billionR nil

Failed SAA-Takatso deal

Public Enterprises Minister Pravin Gordhan

For years, the government had been in talks to sell SAA to the Takatso group, an investment consortium made up of Global Airways and the private equity firm Harith General Partners.

Under the original deal, Takatso would purchase 51% of the company for R51, giving the airline a total value of R100.

Takatso agreed to invest about R3 billion in the airline as part of the deal, a commitment that remains in place despite the deal being scrapped.

Public Enterprises Minister Pravin Gordhan punted this deal following SAA’s entry into the business rescue.

However, the government and other cabinet ministers have criticised the airline’s valuation.

Finance Minister Enoch Godongwana has been a vocal critic, saying, “What I’m reading is that SAA assets are bigger than R51, and we have paid all the debt.”

“So somebody who would be buying SAA would be buying a clean asset without any debt obligation.”

The government has also been hesitant to give SAA any further funding after giving it R51.7 billion in bailouts.

“We have said, thus far, we would need proof of funds. That’s our condition to release further funding to SAA, proof of funds from the equity partner,” Godongwana said.

This, along with other uncertainties surrounding the deal, saw Gordhan announce that SAA would revert to being 100% owned by the state. 

“We are convinced that SAA can sustain itself in the next year to 18 months and that there are various other ways in which immediate financing can be obtained,” he said. “But at no stage will SAA get money from the fiscus.” 

Business Leadership South Africa CEO Busi Mavuso said this was an example of how not to restructure a state asset and is somewhat of an embarrassment.

Mavuso said the restructuring of state assets is a priority if South Africa wishes to move past the era of perpetual bailouts. 


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