South African Airways (SAA) is technically bankrupt after its debt increased to R15 billion – more than its assets.
This is according to the City Press, which reported the “airline’s finances are in tatters and the Auditor-General has raised serious concerns about its viability”.
According to the article, the airline is considering selling off some of its assets, including its catering arm, Air Chefs, and SAA Cargo.
A top SAA official told the newspaper that the airline will look at the government for more bailouts, because the banks are refusing to lend it money.
In August, a media report stated that the government plans to spend R59 billion on bailouts for the SABC, SA Post Office, SAA, and Sanral.
If the organisations are not given the funds, they may collapse or default on current outstanding loans.
Dudu Myeni and friends broke the SAA
The Citizen reported in March that SAA should have cut even this year, and started to turn a profit in 2020.
However, the newspaper stated that decisions made while Dudu Myeni was running the show brought this plan to a halt.
Under Myeni, decisions were made for “political” rather than commercial reasons, which broke the company.
Many people see privatization as the solution to SAA’s woes, but according to airline expert Guy Leitch this is not an option.
Leitch said privatization was off the table because SAA was technically insolvent, with its “liabilities surpassing its assets by about R17 billion”.
Speaking to the Sunday Times, Comair CEO Erik Venter said that SAA would fall over without government subsidies.
He added that there is no hope of “turning the stricken national carrier around”.
“There are too many people benefiting from the way it is, both in terms of those who are looting the business and those who are getting paid salaries… to want to change the status quo,” said Venter.