SAA could receive another R10billion cash injection from govt

Government may give South African Airways (SAA) another bailout to the tune of R10 billion, the Democratic Alliance (DA) has revealed in Parliament.

The claim was made on Wednesday when SAA's leadership appeared before Parliament's Standing Committee on Public Accounts (Scopa) to discuss their irregular expenditure and financial difficulties.

The national carrier only owns nine planes in its 60-strong fleet and currently spend R3,5 billion a year to lease out the remaining jets.

Government in July gave the airline a R2,2 billion cash injection to pay one of its debtors.

According to the DA, the R10 billion bailout could be financed by the sale of government's Telkom shares.

Scopa chair Themba Godi says yesterday's proceedings is only the beginning in tackling the problems facing the airline.

Read: Parliament expresses concern over SAA's enormous debt

What our hearing yesterday helped us to do was to isolate issues that we believe need to be followed up. Once that is done, we will have a much clearer picture and we will be able to pinpoint areas of concern and what needs to be done to correct them.

Themba Godi, Scopa chair

Godi said the committee requested a number of documents to thoroughly investigate the dealings of the airline to see where wrongdoing had occurred.

He added the challenges SAA faced would take time to be resolved.

Despite all the issues SAA faces, including that of leadership, Godi remains hopeful that the situation can improve.

Hope springs eternal. I'm always hopeful, because I believe that problems must be confronted head-on, decisively and firmly. We are going into SAA with the intention to have the problem solved.

Themba Godi, Scopa chair

Transport economist, Dr Joachim Vermooten, says one of the reasons SAA is continuously losing money is because their mandate is too broad.

This, coupled with governments lack of funds to put into the airline, had knock-on effects.

According to Vermooten, when government issues guarantees to SAA, banks end up paying for the losses. This ultimately leads to government replacing the banks, which doesn't solve the problem, Vermooten says.

They are trying to do too much and government doesn't actually have the money to try and fund it.

Dr Joachim Vermooten, Transport economist

Listen to the full interview below:


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