SAA deal still can’t take wing

UNCERTAINTY: NOT CLEAR IF IT CAN FLY ON ITS OWN

‘If Takatso does not come up with R3bn, there’ll be no deal.’

How far can the government’s promised R2.6 billion stretch to fund an airline? SA travellers may have to start asking themselves that question as the Takatso constortium’s purchase of SA Airways (SAA) still seems far away, and with it the R3 billion in additional working capital.

The bottom of SAA’s bank account may be far closer than it would like to admit. But nobody’s saying anything.

Previous media reports suggested that SAA was losing up to R500 million every month. That’s five months of life from R2.6 billion, if no revenues are incoming.

And with rocketing input costs like fuel, margins are thin, and margins for error even more dangerously slender.

SAA previously told The Citizen the alleged losses touted by analysts and peers were fabrications. It didn’t present alternative data.

Public Enterprises Minister Pravin Gordhan alluded to the finite nature of the R2.6 billion at last week’s standing committee on public accounts meeting. But neither he nor SAA’s multitasking John Lamola, who doubles as interim chair and interim chief executive, would elaborate further on the state of SAA’s finances.

SAA said: “The 2022/23 losses and gains will be communicated in the annual financial statements.”

The last time it published financial results were for 2017/2018 fiscal, four years ago, of which two were spent in business rescue.

Nobody knows whether SAA can make it on its own until Takatso finally buys it, or exits from the deal. There is just no certainty. Presently the sale of SAA to Takatso and the accompanying R3 billion in working capital remains a mirage. If Takatso doesn’t come up with the R3 billion to inject into SAA, Gordhan said there would be no deal, and possibly no SAA either, unless a bailout gets scheduled.

It is unclear whether SAA would have deep enough pockets to keep going if the deal falls flat.

And, it’s not clear whether Takatso has the money to conclude the deal. It said it cannot access funds until government settles all SAA’s historical debt. On top of that, it’s unclear how much of the R3.5 billion in receivership debt remains outstanding.

“Takatso has always been clear it will not take on any historic debt of SAA. It wants to be sure all prior liabilities of SAA have been finalised in accordance with the business rescue plan...” it said.

Outgoing Takatso CEO Gidon Novick said he was unsure if the consortium had managed to raise the necessary money at all.

SAA may not be able to afford time. If the deal falls flat, there is no extra money for it. It was excluded from last month’s interim budget and SAA would have to make it through to fiscal 2023 on its own steam.