Claims of successful SAA rescue complete fiction – DA

The Democratic Alliance (DA) has slammed the government’s plan to rescue the bankrupt South African Airways, stating that claims of a successful rescue are complete fiction.

In a recent statement, DA Member of the Standing Committee on Public Accounts (SCOPA) Alf Lees said that the business rescue process has cost South African taxpayers R7.8 billion in bailouts since it began in December 2019.

“The DA will make every effort to ensure that the SAA BRPs (Business Rescue Practitioners), SAA board, and Minister of Public Enterprises Pravin Gordhan cease their collective obfuscation and give clear and unambiguous answers when they appear before SCOPA on Thursday 25 March 2021,” Lees said.

“The facts are that the business rescue has cost the taxpayer, and poor South Africans in particular, a massive R7.8 billion in cash taxpayer bailouts since the business rescue process started on the 5th of December 2019.”

“In addition, the business rescue will continue to drain at least another R8,0 billion in a futile attempt to begin minuscule flight operations and to keep our dead national bird operational,” Lees said.

Lees added that the “successes” touted by the BRPs could have been achieved without additional bailouts by the liquidation of the failed state-owned airline.

Results of liquidation

Lees argued that while liquidation would have required bailouts for SAA liabilities guaranteed by the government, it would also have resulted in the following:

  • The entire R38 billion in liabilities and not just the R35.7 billion could have been written off;
  • All of the SAA workforces could have been retrenched at a fraction of the cost of the Voluntary Severance Packages totalling R2.8 billion;
  • Overheads would have been eliminated and not just reduced; and
  • The preservation of critical memberships of the airline is of no consequence as SAA as a state-owned or majority state-owned entity will undoubtedly continue to run at taxpayer-funded losses if it finally gets operational.

Lees added that the Civil Aviation Authority (CAA)’s granting of 13 exemptions for SAA’s recent flights to fetch vaccines from Belgium were “the scariest of the failures in the fifteen-and-a-half months-long business rescue process”.

“If true, the CAA will have destroyed its reputation,” Lees said.

“There was, in all likelihood, massive political pressure on the CAA from Minister Gordhan to bend the rules, resulting in an allegedly unqualified flight crew to take the helm of a flight during which an extreme in-flight incident occurred that could have proven fatal.”

“Considering the fact that the ANC and the Department of Public Enterprises have abandoned SA Express and allowed it to be liquidated, so should they have let SAA be liquidated and used the billions wasted on it to stimulate the economy and save at least some of the millions of jobs lost as a result of Nkosazana Dlamini-Zuma’s irrational lockdown regulations,” Lees said.

“SAA cargo business will be profitable”

In defence of the flights to Belgium to source COVID-19 vaccines, the Department of Public Enterprises previously said that this was a proof-of-concept exercise for the imminent relaunch of SAA’s cargo business.

“This flight was also a test relaunch of the SAA Cargo business,” the DPE said. “Many airlines around the world, including Lufthansa and Ethiopian, have intensified their cargo businesses while the passenger loads declined sharply, in order to bring in revenue.”

“There will be many such flights by SAA in the months to come.”

The department argued that over time, cargo will become a profitable business for the airline.

“Partnerships with the private sector will be considered at the appropriate time. These flights will become commercially viable.”

The DPE said claims by disgruntled pilots and SAAPA that the flight was expensive are incorrect, and only serve to sabotage the relaunch of SAA Cargo.

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Claims of successful SAA rescue complete fiction – DA