BUSINESS OF SA AIRWAYS

SAA’S DEBT IN PERSPECTIVE

WITHOUT doubt, one of the most anticipated topics of the Sona was the ongoing dilemma of what to do with flagging state-owned enterprises. For those in the aviation industry, the fate of the national carrier SA Airways (SAA) is of particular interest. Last year, the World Travel and Tourism Council estimated that the travel and tourism sector in South Africa would make a direct contribution of R139.3 billion last year. This is the narrowest definition of contribution and includes GDP generated as the result of direct sale of travel commodities (flights and accommodation), travel industries (booking services and restaurants) and other sources of spending, such as government and corporate travel spend. SAA purportedly needs R21.7bn to be able to implement its turnaround strategy by 2021, along with another R4bn now to refinance or pay back R9.2bn on maturing loans. This is just shy of R26bn, about 18 percent of the GDP contribution of the entire industry last year. In fairness, assuming the R21.7bn will be spread over three years, this year’s bill will be 8 percent of what the entire industry turned last year. If SAA needs R11.23bn this year, it means the burden on each taxpayer would be R2 291.84. The ultimate burden isn’t spread across income of the taxpayers alone. The state fiscus is funded through other sources such as VAT, company tax and fuel levies. This isn’t a fair comparison. However, it’s important to put these numbers into perspective. | Staff Reporter