SAA bailouts ‘flights of Sisyphean madness’

Tebogo Tshwane

On top of being expected to raise R10.3 billion for the restructured South African Airways (SAA), the rescue practitioners’ final plan also proposes the state support the new airline until it becomes profitable and self-sustaining — which is only likely to be in 2024.

Business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana released the long-awaited 110-page rescue plan on Tuesday evening.

The plan was released a day later than the 15 June deadline the BRPs were granted in their fifth extension since December 2019.

Over the past 10 years, SAA has been under severe financial distress and has not made a profit since 2011, incurring R27 billion in losses since 2012.

The final plan puts the state’s bill for settling SAA’s current liabilities and funding the restructured airline at R26.7 billion.

This amount includes the R16.4 billion that was allocated in the February budget to pay off government-guaranteed debt and interest over the next three years.

“SAA’s losses of R5.5 billion in 2018 and R5.1 billion in 2019 provide more than sufficient evidence that the vast taxpayer-funded bailouts over many years have been no remedy to the fundamental weaknesses and organisational failures that have reduced the national airline to its current state,” said Institute of Race Relations deputy head of policy research Hermann Pretorius.

“Repeating this flawed remedy in the expectation of a different result reveals the absence of sane thinking on the part of government and Minister Pravin Gordhan.

Pretorius noted South Africans were already under severe financial and economic strain “due to the economic policy failures of the government” and have had time and again to foot the bill for “these flights of Sisyphean madness”.

The rescue plan shows that in the initial phase of the restructured airline, which will gradually come into operation from June, there will only be domestic travel as outlined in alert Level 3 and 2 of the lockdown regulations.

The routes that will be retained are Cape Town, Durban and Port Elizabeth, with six aircraft in its fleet until February 2021.

In the beginning, South African Airways’ restructuring will only retain 1 000 members out of the current 4 622 domestic employees. – Moneyweb with additional reporting by Amanda Watson