Government must be realistic of its role throughout SAA Business Rescue

Issued by Alf Lees MP – DA Member of the Standing Committee on Public Accounts
05 Dec 2019 in News

Now that the process of putting South African Airways (SAA) into Business Rescue has finally been put into motion by President Cyril Ramaphosa and the SAA board, it is critical that once Business Rescue is awarded that the outcome is one that removes all liability for SAA from the Government and the South African taxpayer.

There can be no equivocation on the part of government in ensuring that if SAA survives it must be as a private enterprise.

The financial status of SAA and its subsidiaries is largely unknown given that Annual Financial Statements for the past two financial years have not been published by the SAA board. This makes it impossible for a clear understanding of what the financial status of the different parts of the SAA Group, such as Mango are. Despite this delinquency on the part of the SAA board it seems clear that there are some parts of the SAA Group that are possibly profitable and have potential, whilst there are other parts that must be shut down forthwith.

Clearly it is highly unlikely that there will be a buyer who will be willing to purchase SAA and its subsidiaries as a whole, thus an unbundling of the SAA group, the sale of parts with potential and shutdown of those parts that have no future is required. The following is a possible strategy to be adopted:

  • Mango separated from the SAA Group and offered for sale preferably by way of a public offer and listing.
  • Mango to take over SAA domestic routes which are profitable.
  • Remaining SAA with international routes to be offered for sale.
  • SA Express to be shut down and Mango to take over profitable domestic routes if any exist.
  • Air Chefs Catering to be shutdown.
  • SAA Technical, given the levels of fraud and corruption, to be shutdown.

The DA will be writing to the Business Rescue Practitioner once appointed to request that we discuss the DA proposals with her/him.