The current administration is stretching beyond it’s financial limit. Several strategic sectors are in dire need of urgent bailout in billions. Finance Minister Malusi Gigaba will in all likelihood announce a R15bn bailout to South African Airways (SAA) when the national carrier reports back to Parliament on its performance on August 4.
Gigaba and his deputy Sfiso Buthelezi will be present at Friday’s meeting, where the SAA top brass will present on the airline’s quarterly performance, finances and progress with the long-term turnaround strategy.
In the presentation that will be given to Parliament, SAA says it is a going concern and that it has managed to extend its maturing debts to three years.
However, a document detailing SAA’s loans and maturing dates show that a total amount of R6.783bn of debt matures by the end of September. The document lists 15 loans, which amounts to R14.6bn, with the maturity dates ranging from end-September 2017 to 30 April 2022.
In the list of loans provided by SAA, the names of the lenders are not being disclosed, which means the financier could in fact be government.
In the presentation, SAA says it will require a capital injection of R13bn over a period of three years. However, Democratic Alliance SAA spokesperson Alf Lees believes it will be closer to R15bn to make provision for the R2.2bn Treasury bailout.
At the end of June, National Treasury had to step in and grant SAA R2.2bn – money it took from the National Revenue Fund, so that SAA could repay its loan to Standard Charter.
SAA’s latest group income statement and cash flows show that the airline is in considerable financial distress.
It recorded a net loss of R1.459bn year to date, compared with R1.388bn in the same period last year.
In July the airline’s available cash was –R568m, dropping from R6m in June this year.
“That means SAA is R500-odd million short which raises the question how the airline is going to cover operational expenses such as salaries to staff and fuel costs,” said Lees.
- Lees also noted that SAA’s representation of cash inflows and outflows for the month of June did not include the R6.7bn loan repayments that are due at the end of September. “This is misrepresentation of the highest order.”