The Democratic Alliance (DA) has said the government has agreed to give embattled South African Airways (SAA) a R21-billion bailout.
DA MP Alf Lees said a draft new SAA Business Rescue Plan, prepared by Business Rescue Practitioners (BRPs) Siviwe Dongwana and Les Matuson, reveals that the government has agreed to the bailout.
Lees said the DA has seen the draft business rescue plan.
“This proposal is part of a plan for a re-imagined ‘new airline’ that is to be established as a state-owned company by the government in terms of the proposed restructure,” Lees said.
Lees said according to the draft business rescue plan, the government has agreed to provide funding for the following:
- R2-billion working capital injection to restart SAA post-Covid-19
- R2 billion for the retrenchment of employees
- R16.4 billion to pay lenders
- R600 million for the payment of the general concurrent creditors
Lees said the draft business rescue plan envisages the new airline to fall under a new holding company called “New HoldCo” which shall also oversee SAA City Centre (SACC), SAA Technical, Air Chefs, and Mango airlines.
“Renewed plans by the BRPs calling for the establishment of a new airline are hardly surprising. It follows a spirited political campaign by [the minister of public enterprises Pravin] Gordhan to discredit the business rescue process and resurrect the folly of failure by calling for the establishment of a new state airline.
“That the BRPs are now singing from the same hymn book as Gordhan clearly shows that the minister has hijacked the process,” Lees said.
The DA said if the draft business rescue plan was approved in its current form, SAA would continue to drain the country’s fiscus.
Lees said the BRPs were projecting that the new airline would trade at massive losses totalling R19,9 billion for the first three years:
- Year 1 – R8.1 billion loss
- Year 2 – R7.5 billion loss
- Year 3 – R4.3 billion loss
These losses exclude trading losses by Mango, SAA Technical, Air Chefs, and SACC subsidiaries which are also likely to rake up tens of thousands or even billions of rands in losses.
“The insanity that is the ‘rescue’ of SAA, on the basis laid out by the BRPs, should not be given any serious consideration. The only credible course of action for the BRPs is to apply to court for the liquidation of SAA as is required by Section 81 of the Companies Act.”
(Compiled by Makhosandile Zulu)