Shutting SAA may cost pretty penny
How much will it cost to close down SAA ? Is it R11bn, R47bn or R60bn?
The DA has taken issue with the claim by deputy finance minister Mondli Gungubele that it would cost R60bn.
Gungubele made the comments in parliament six months ago to justify further bailouts for the airline.
He said the R60bn would be three times the funding – R21.7bn – SAA has asked from Treasury for a turnaround plan over three years.
Whether it costs more to budget for “the funeral” or “the recovery” of state-owned enterprises (SOEs) is a critical debate in political circles as the government struggles to resurrect companies that have been damaged by mismanagement and looting. Last week’s medium-term budget policy statement allocated less than had been requested to several SOEs, but nonetheless made significant new allocations to SAA, SA Express, Sanral and the SA Post Office. SAA got another R5bn.
DA deputy shadow minister for finance Alf Lees says the department of public enterprises’ own numbers show that Gungubele’s estimates are way out as not every creditor would have to be paid in full.
When an insolvent company is liquidated, it’s seldom the case that trade creditors are paid in full, if at all.
A proforma balance sheet given to Lees by the department as part of a response to a parliamentary question shows that SAA has an estimated R55bn in liabilities and R7.8bn of assets. A large portion of what is owed is trade and other payables and air traffic fees, which together amount to about R20bn of the current liabilities.
Lees argues that only guaranteed debt would have to be settled. This, according to the most recent numbers publicly provided on state guarantees, amounts to R11bn in the case of SAA . This would be a minimum cost of the liquidation, he says.
If other liabilities, or a portion of them, were to be settled with the proceeds of the assets, then a total R18.7bn would be repaid to creditors. But of that amount only R11bn would be required from the fiscus – half of the R21.7bn that SAA wants.
But the department of public enterprises argues that such a disorderly winding down of SAA would harm the credit status and reputation of other state-owned enterprises and is therefore not viable.
If all debts are settled, which is the department’s preference, then the cost to the fiscus of closing SAA would be R47.2bn.
Lees argues, though, that an orderly winding down of SAA is just not affordable. “A so-called orderly closure of SAA is simply unacceptable because it would cost the state, taxpayers, R47bn. This is on top of the R10bn in bailouts given to SAA in the previous financial year.
“Whereas a liquidation would cost the state in the region of R11bn, of which R5bn has been included in the current MTBPS adjustments appropriations,” he said.
The department of public enterprises argues, though, that “the option of liquidating the national airline is not desirable”. —