Selling SAA is only flight path around debt mountain
On June 27 this year I received a bizarre phone call from Dudu Myeni, chairwoman of the SAA board, who accused me of spying on her and threatened to sue me, after she had been caught out flying on British Airways.
This call brought home to me the kind of madness that seems to pervade the management of SAA.
The fact is that Myeni, who behaves less like a chairwoman and more like a "corporate warlord", has taken the national airline to the brink: in three years SAA has accumulated losses of R11.6-billion.
The first quarter of this year saw losses of R1.46-billion.
At this rate, the 2018 year is heading for a R5.8-billion loss, which would amount to a loss of R17.5-billion over four years.
The SAA turnaround plan reflects that the airline will continue to run at losses over the next five years. SAA has no funds available to continue to trade, let alone pay back the balance of R10.1-billion in loans.Lenders seem to be running scared despite government guarantees - Standard Chartered Bank called in R2.2-billion.
Minister of Finance Malusi Gigaba was forced to invoke section 16 of the Public Finance Management Act to make a R2.2-billion "emergency" payment to SAA to pay Standard Chartered.
Apparently Citibank won't extend its R1.5-billion loan beyond the end of this month, and Nedbank appears to be digging in its heels on its loans of R3.1-billion due in 2020 and 2023, all because Myeni remains as the SAA chair. It seems she will remain in the post until "uBaba ka Duduzane" (President Jacob Zuma) goes.
The fact is that R6.78-billion in loans is repayable by the end of the month and SAA simply doesn't have the money to pay.
It seems to be irresponsible to continue to lend to SAA even if the loans are guaranteed by the government when the airline will not be able to repay the loans or even meet the interest payments in full.
Gigaba's reputation is at risk as a result of the ongoing SAA drain on the fiscus.He is already missing commitments in his 14-point plan, such as by having failed to finalise the SAA CEO appointment by the end of July. Indeed, South Africa's sovereign ratings status will be heavily influenced by how Gigaba deals with SAA...
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