TAXPAYERS IN FOR ANOTHER BAILOUT:
OUR national airline appears to have a taste for turbulence, an approach best understood in context of the steady stream of state guarantees that have kept the business operating.
By trading with such reckless abandon, taxpayers have felt the sting of each and every bad decision.
No quibble then who, ultimately, foots the next round of profligacy, this time dating back more than a decade.
The High Court in Johannesburg has ordered SAA to pay R104-million for anticompetitive practices, preempting another, larger penalty anticipated for the same malfeasance, in the order of R1-billion, maybe more.
The first, as reported by Business Day, was slapped on the carrier after Nationwide Airlines took the legal route following a Competition Tribunal finding in 2010 that SAA had offered incentives to travel agents from 2001 to 2005. These inducements helped entrench SAA’s dominant position, an uneven playing field it continues to exploit today thanks to Treasury’s generous sureties that have helped mask the poor fortunes of a foundering business scandalised by politics and financial incompetence.
Nationwide is currently under liquidation and creditors are waiting in line for scraps.
The second damages claim was brought by Comair, which operates Kulula and British Airways, and according to a Moneyweb report, it is only the quantum that needs adjudicating. With interest, the claim could be as much as R1.5-billion.
SAA, quite simply, does not have the money. It is burning through cash and auditors refuse to sign off the financials without another guarantee, something Finance Minister Pravin Gordhan is resisting unless board chair Dudu Myeni departs. President Jacob Zuma, as we well know, is blocking Gordhan’s attempts.
Zuma would never sanction it, but until some allowable equity partners enter the frame, with their vested interest a driving force, SAA will fester.
And until the taxpayer taps are turned off, competition in the industry – ostensibly for the benefit of passengers – will be undermined by the faltering missteps of SAA and its egregious executives.