SAA – what you need to know

ALTHOUGH SAA is
optimistic about what it
calls a ‘robust’ five-year
business plan, the airline’s
financial situation remains dire.
In a statement released
last week, the airline said it
relied heavily on government
guarantees to remain
operational and had not been
profitable in the last few years.
“The situation is not only
undesirable but unsustainable
and this led to the
development of the turnaround
plan,” the statement reads.
TNW rounds up the most
relevant news on the airline.
In a cash crunch?
According to widespread
media reports, the UK-based
Standard Chartered Bank
has declined to renew its
loan facilities to SAA and
has demanded repayment
of these loans.
Acting SAA ceo, Musa Zwane
says: “SAA has been in contact
with its lenders to renegotiate
the management of its loans, a
normal occurrence when loans
become due and payable.
The airline has government
guarantees totalling R19,1bn.
By June 30, R9bn will be due
and payable and only one
lender has expressed a desire
to have its loan paid back.”
 The airline denies that any
operations will be affected.
Musa said it would continue to
operate, honour its obligations
to its customers, suppliers
and partners.
Meanwhile, travel agents
have told TNW that the airline
still owed them pay-outs for
their 2016 contracts. They
are still waiting for the new
contracts to be signed.
Update on leadership
National Treasury recently
told TNW that recommended
candidates for the position of
ceo at SAA would be submitted
by the board for Minister
Malusi Gigaba’s consideration
by the end of June, but the
Minister has since said that a
new ceo would be identified in
“the next couple of weeks”.
Chairperson Dudu Myeni’s
days on the SAA board are
also numbered, as the Minister
announced that she had been
appointed for her final term
and that her successor would
be announced at SAA’s next
AGM.
Dudu was recently served
with a compliance notice by
the Companies and Intellectual
Property Commission
following claims that she
misrepresented a board
decision about the multimillionrand
deal with Airbus.
Is a merger on the cards?
Treasury remains tight-lipped
on a merger between SAA,
SAX and Mango and the
possible introduction of an
equity partner. “The study
undertaken by Bain and
Abacus in this regard has
been completed and the next
steps are for National Treasury
and Department of Public
Enterprises to review the
options and recommendations
to allow an informed decision
to be taken on how to
proceed,” a spokesperson
recently told TNW.
However, during her Budget
Speech on June 14, Minister
Lynne Brown said she believed
there was light at the end
of the tunnel and that she
expected the task team to
come up with proposals soon.
SAX’s finances
Parliament’s public enterprises
committee learned in a briefing
by SA Express executives that
the company had an unaudited
R234m loss in the 2016-17
financial year after a R16,9m
profit the previous year.
Revenue of R2,4bn was
posted compared with the
previous R2,5bn, which
translated into a nett operating
loss of R104,7m compared
with the previous profit
of R27m. The results are
provisional and will only be
finalised at the end of July.
Minister Brown said the
continued decline in revenue
did not ensure that the airline
would be able to meet its
operating costs.
She said the risk of
insolvency remained high
should SAX be unable
to generate profits from
2016/17.