Massive SAA debt cause for concern
All of SAA’s loans are backed by government guarantees that in total now amount to R19.1 billion.
There is no official response to the not surprising reports that SAA is mired in a financial crisis so severe that there is serious doubts there is sufficient funding to pay this month’s wage bill.
But this official reticence should not really be a surprise. There is always a pool of public funding to bail out the dysfunctional national carrier. It has happened in the past and, if things are allowed to continue unchecked, it will doubtless happen again.
According to the DA, the airline has listed R8.88 billion repayable in the current financial year, but some of these dates have already come and gone. All of SAA’s loans are backed by government guarantees that in total now amount to R19.1 billion.
SAA’s major shareholder remains the Public Investment Corporation which, in turn, is funded by the Government Employees Pension Fund. Although there are rules and regulations to mitigate against any profligate misapplication of funds, SAA’s liquidity ultimately comes back to public funding.
This in itself might be a healthy thing. But the staggering amounts of growing debt accrued by SAA to keep flying patently demonstrates that this equation is so way out of kilter as to cause serious concern.