I have today written to Minister of Finance, Nhlanhla Nene to ascertain why Treasury found it prudent to extend a fresh R6.5 billion guarantee to South African Airways (SAA).
SAA is currently in the midst of a 90 day turnaround strategy. It is irrational to be redirect billions more in funding to SAA before the results of this turnaround strategy have been accounted for.
South African’s were informed of this latest guarantee, not through an official statement from Treasury but during an off-hand interview with Minister Nene on the side lines of the World Economic Forum in Davos, Switzerland.
This latest guarantee is in addition to the R5 billion guarantee SAA already has in place.
It is common knowledge that SAA is not a going concern and has not released financial statements for the last three years. Instead of constantly running to Treasury with its begging bowl in hand, SAA should be focussed on:
The containment of the current and untenable rate of cash reserve and shareholder value depletion.
The redress of deficiencies in the group’s capital composition.
Consolidating flight routes and cutting those which are not profitable or essential to the operations of SAA.
SAA must get to a stage where it can leverage off its balance sheet and fund its ongoing operations without the stringent conditions imposed by lenders due to a weak financial position. The department is once again simply throwing good money after bad as this guarantee does nothing to solve the institutional problems facing SAA.
Treasury can no longer afford to be used as a safety net. Until the core issues surrounding SAA’s rapid decline are confronted head on this cycle of endless bailouts and guarantees will continue.
Shadow Minister of Public Enterprises
Source : Democratic Alliance