South African Airways’ recent R2,2 billion bailout from National Treasury is just one of many, with the struggling airline having been given billions of rands in both bailouts and guarantees over the last number of years.
Today’s announcement that SAA has been bailed out from the National Revenue Fund to pay Standard Chartered Bank the loan amount of R 2,207 billion is a blow to the credibility of both the SAA board and to National Treasury.
Only three days ago when I asked National Treasury whether they were ready to meet the guarantee obligations both SAA and National Treasury reassured the parliamentary Standing Committee on Finance that the plans were in place to meet the R 9,0 billion SAA loan payments by 30 June 2017. This was clearly not the case.
It is deeply ironic that it has been necessary to announce a R2,3 billion bailout for the national airline in the middle of the ANC’s National Policy Conference 2017 which is heavily focused on economic policy, including stabilising zombie state-owned enterprises such as South African Airways.
Standard Chartered Bank evidently has no faith in the leadership, management and strategy of South African Airways.
The payment to Standard Chartered has been made in terms of section 16 of the PFMA which makes provision for the use of funds in an emergency situation as follows:
“[T]he use of funds from the National Revenue Fund to defray expenditure of an exceptional nature which is currently not provided for and which cannot, without serious prejudice to the public interest, be postponed to a future parliamentary appropriation of funds.”
The PFMA requires that such a payment must be reported to Parliament within 14 days and must be included in an adjustments budget within 120 days of the Minister authorising the expenditure.
This emergency funding for SAA indicates the serious crisis that SAA has been mismanaged into.
This taxpayer bailout makes no difference to the cash crisis at SAA. SAA is losing in the region of R370 million every month and is apparently scratching for cash to pay salaries.
We look forward to the Minister’s report to Parliament within 14 days. This report must give details of why this expenditure was authorised as being an emergency situation.
The decision to reject, with costs, Dudu Myeni’s application today by the Companies Tribunal only reinforces the need for her to be removed as a director of South African Airways (SAA).
Ms Myeni applied to have the Companies and Intellectual Property Commission’s (CIPC) compliance notice removed from her record.
The CIPC found that Ms Myeni had misrepresented information to the then Minister of Public Enterprises, Malusi Gigaba, when she told him that the SAA board were financing two aircraft when they were, in fact, financing ten.
The costs involved in this case are likely to be high and the DA will submit parliamentary questions to the Minister of Finance for details of whether SAA has paid any of the costs of the Companies Tribunal hearing including the costs of Ms Myeni’s legal representation.
There are overwhelming and perfectly valid reasons why Ms Myeni should immediately be removed from the SAA board on which she sits, not only as a director but as the Chair of the board.
At a recent meeting of the Standing Committee on Finance (SCOF), I managed to persuade National Treasury to announce that Ms Phumeza Nhantsi had been appointed as the Chief Financial Officer (CFO) of South African Airways (SAA), after having served as the interim CFO since November 2015.
Her appointment as CFO has been made despite the enormous current projected losses of R4,6 billion for the 2016/17 year.
Furthermore, during her time as interim CFO, SAA was involved in a number of controversial financial debacles including the infamous Airbus debacle that resulted in Jacob Zuma firing Nhlanhla Nene as the Minister of Finance in December 2015, rocking South Africa’s economy.
The most egregious financial crisis arose in July 2016 when SAA, apparently without following due process, appointed BnP Capital to raise debt funding for SAA at a fee cost to SAA of R256 million, a cost far exceeding what the market would have determined. When this outrageous contract was exposed by the DA and others, SAA were forced to cancel this contract but even so the cancelation fee was reported to amount to almost R50 million without any value at all received by SAA.
The BnP debacle was clearly pursued with the goal of enriching the principals of BnP at the expense of SAA and taxpayers. The same taxpayers who have had to continually bail out SAA, and will likely very soon have to bail SAA out yet again. The appointment of BnP was a financial contract and therefore would have required the approval of Ms Phumeza Nhantsi, the newly appointed CFO. Indeed the BnP contract may well have been initiated and negotiated by Ms Nhantsi.
SAA will be appearing before the SCOF on Wednesday the 17th of May 2017. At this meeting, I will ensure that the newly appointed SAA CFO is questioned about her performance as the interim CFO as well as her culpability with regard to the financial debacles at SAA during her time as the interim CFO.
We welcome the court interdict putting an end to the strike by cabin crew employed at South African Airways.
However, today’s strike, which has caused the cancellation of 32 flights, and has left thousands of passengers stranded at airports throughout the country, is a symptom of a much deeper crisis at South African Airways.
The fact is that Dudu Myeni, who behaves less like a chairperson, and more like a “corporate warlord”, has run the national airline into the ground, and bankrupted South African Airways.
A staggering loss of R4.5 billion is projected for 2016/17, which adds to the R1.5 billion loss in 2015/16 and R5.6 billion loss in 2014/15.
A total of R19.1 billion worth of government guarantees have apparently already been exhausted, which means that South African Airways will likely need a further bailout long before the end of the 12 month “going concern” period claimed by the national airlines directors and verified by external auditors in 2016.
The fact is that South African Airways is now in a crisis which effects the sovereign credit rating of South Africa.
I have, therefore, written to the Chairperson of the Standing Committee on Finance, Yunus Carrim, requesting him to schedule an urgent meeting with South African Airways on 04 or 05 May 2017 in Parliament.
We cannot sit back and allow things to continue like this; we have to step in and stop the rot at South African Airways.
The latest information provided to the Standing Committee on Finance (SCOF) by the South African Airways (SAA) board reveals a staggering loss of R4.5 billion for 2016/17.
This new figure of R4.5 billion is significantly higher than the R3.5 billion revealed ten days ago and the R1.7 billion estimated in September 2016.
This is an increase of R1 billion in the space of ten days and an increase of R2.8 billion in the space of 6 months.
With a full month of figures left to be reported on, this figure of R 4.5 billion could experience yet another significant increase.
The DA will interrogate these volatile numbers fully when SAA appears before the SCOF on Wednesday, 29 March 2017, as it is simply inconceivable that SAA losses have increased by a staggering R1 billion in a matter of weeks.