SA Express losing R1 million of taxpayer money every day

SA Express is losing more than R1 million every day due to aircraft sitting idle in hangars, the City Press reports.

Sources close to SA Express management told the City Press that the company has paid R150 million to lease 21 aircraft in the past five months since the state-owned airline was grounded.

SA Express aircraft were grounded after being classified as too unsafe to fly, but the company still pays to lease the aircraft despite their inactive status.

Sources said that the airline paid an estimated R40 million for “scrap aircraft” sitting in hangars between August and the end of October.

“Since they were grounded, they have been paying for aircraft that they are not able to fly,” sources told the City Press.

“It is like taking R40 million worth of taxpayers’ money and pouring it into a black hole.”

The state-owned airline cannot fly these aircraft as they are not airworthy, and they cannot fix them due to a lack of money.

Failure of SOEs

Finance minister Tito Mboweni announced a R1.2-billion bailout for SA Express this week, in addition to a R5-billion bailout for South African Airways.

A managing director of another local airline told the City Press that this bailout would not be enough to save SA Express.

“The R1.2 billion will help address historic debt, but it is not enough to take the business forward,” he said.

“The prospect of that business returning to profitability is not that good, and there is no strategic reason why they should not shut it down.”

SAA and SA Express are not the only state-owned enterprises which have failed dismally to reach profitability, with Emany losing money at an alarming rate.

The government is attempting to resolve the issues within these companies, but it is hampered by the loss of skilled employees and systemic corruption.

Now read: How much of your tax money South Africa’s pathetic state-run enterprises are getting

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SA Express losing R1 million of taxpayer money every day