The settlement agreed to by South African Airways (SAA) with Comair for SAA to pay Comair R 1,2 billion in damages plus legal costs has added to the cash crisis at the national carrier, DA MP Alf Lees said in a statement.
“What this settlement agreement of R 1,2 billion plus legal costs means is that it adds at least another R 1,2 billion to the taxpayer bailouts required to keep the bankrupt SAA in business,” Lees said.
In order to be able to continue trading and flying its aircraft until the end of March 2019, SAA has recently had to borrow another R 3,5 billion on top of the R 14,0 billion that SAA already owes and of which it is understood that some R 9,0 billion plus the recently borrowed R 3,5 billion, amounting to R 12,5 billion, are repayable by the end of March 2019, the DA MP added.
“These massive borrowings remain an albatross around the necks of taxpayers despite taxpayer cash bailouts of R 15,0 billion paid to SAA over the past two years.
“The SAA corporate plan reflects continued losses of R 7,1 billion for the 2018/19 and 2019/20 years. The DA view is that these projected losses are optimistically low and that unless these losses are funded by further taxpayer bailouts the airline will be forced into liquidation,” Lees said.
The DA MP said there is no logical reason for SAA to be in business at all.
“The national carrier is still clearly cursed by maladministration and corruption, is over-staffed and bankrupt. In the second place South Africa, and thus South African taxpayers, is facing a massive cash crunch largely because of the failing ANC created Eskom crisis but also because of the ANC created crises throughout the government,” Lees said.
Lees said there are private airlines that have no drain on taxpayers’ funds that are ready and able to immediately fill any gaps that may arise if SAA were to be shut down.
“South Africa is itself so heavily in debt that it simply does not have the money to continue bailouts of SOE’s such as South African Airways.
“In order to at least save some of the jobs at South African Airways as well as to minimize the taxpayer bailouts, and as Finance Minister Tito Mboweni considers allocations of precious funds in the 2019 budget, the Democratic Alliance urges him to make the hard decision to place South African Airways under business rescue. Sadly with business rescue taxpayers will likely have no option but to meet the government guarantee obligations very foolishly made by the ANC government on behalf of SAA.”
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