Conclude Airbus swap, says Gordhan

SOUTH African Airways (SAA) has been instructed by Finance Minister Pravin Gordhan to conclude a swap transaction with Airbus approved in July by his predecessor Nhlanhla Nene who was axed two weeks ago.

Like Nene‚ Gordhan rejected a revised proposal by the SAA board which the former finance minister believed would have threatened the airline’s financial stability.

The approved deal‚ to be concluded within the next few days, entails SAA swapping the purchase of 10 A320 aircraft for the leasing of five A330-300 aircraft from Airbus.

The swap will mean that SAA will no longer have to pay additional pre-delivery payments (PDPs) to Airbus‚ which would have amounted to R600-million.

“Also‚ as the airline takes delivery of each A330‚ the PDPs already paid‚ which total just more than R1.5-billion‚ will be refunded by Airbus‚” Gordhan said.

“SAA will not be required to recognise impairments‚ as it will no longer be acquiring aircraft.

“It had been estimated that such impairments could have totalled in excess of R1-billion.

“The implementation of the transaction will therefore improve the airline’s financial position by alleviating the cash flow pressure and improving its profitability.

“Further measures will be taken next year to stabilise the airline‚” he added.

Rather than lease the five aircraft from Airbus‚ SAA chairwoman Dudu Myeni and her board had wanted to amend the transaction to allow SAA to buy the A330-300 aircraft and then sell them and lease them back from an unidentified local lessor.

Gordhan said the National Treasury had been in direct contact with Airbus to ensure all required actions were executed smoothly to conclude the deal.

“Airbus has indicated they are amenable to the implementation of the transaction and have required that all legal documentation be in place by Monday.

“The National Treasury will work closely with Airbus and SAA to finalise the swap transaction‚” he said. — BDlive