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https://www.ft.com/content/06642212-e2a ... 2428919ceeCAPE TOWN, Nov 27 (Reuters) - South African state-owned airline will need 7.5 billion rand ($540 million) from next month
to fund day-to-day operations,
a presentation by the airline showed on Tuesday.
The presentation also showed that banks were not willing to negotiate over a 3.5 billion loan to South African Airways unless
it received additional commitments from the government. ($1 = 13.8869 rand)
https://www.ft.com/content/06642212-e2a ... 2428919cee5 hours ago
South African Airways flew the flag for a proud young democracy after the country’s emergence from the apartheid era.
But by 2015 it was heavily indebted and plotting a move that reflected its chronic mismanagement
— opening a money-burning routeto Khartoum as a favour by then-President Jacob Zuma to his Sudanese counterpart.
One civil servant scribbled across a report to the finance minister:
“I cannot understand why this entity can contemplate another lossmaking route!”
The plan was ultimately defeated by the Treasury and
the note revealed this year by a probe into Zuma-era corruption.
Yet many other financially destructive ideas were put into practice.
The fate of SAA, which has not turned a profit for six years
and required about R30bn ($2bn) of government bailouts over the past half-decade,
has become a big test for Mr Zuma’s successor, Cyril Ramaphosa.
The former businessman took office with a pledge to rebuild state institutions
brought low by graft and misrule and threatening public finances.
Even his own finance minister, Tito Mboweni,
has balked at the cost of saving SAA,
which is seeking about R16bn from the state in the short term
to shore up the airline while it plots a return to profit by 2021,
and eventually looks for an outside investor.
Pravin Gordhan, a former South African finance minister and
now Mr Ramaphosa’s overseer of state companies,
said that while he backed the survival of the airline,
SAA must fight the legacy of corruption before private investment is feasible.
“Will you buy a shirt full of holes even if it is on sale?
We need to clear out the dirt for this airline to survive,” he told SAA staff this month.
Many blame the company’s woes on years of misrule under Dudu Myeni,
executive chair until last year
who is accused by opposition parties and civil society group
of running the airline as a fiefdom under Mr Zuma’s protection.
They say Ms Myeni, who is also the head of Mr Zuma’s charitable foundation,
dispensed favours through contracts to lease planes and
— as in the Khartoum case — the routes they flew.
Ms Myeni and Mr Zuma have denied any wrongdoing.
SAA has made efforts to improve performance,
putting in place a turnround plan under Vuyani Jarana,
its new chief executive.
But it is fighting major mis-steps in the past,
such as cutting long-haul connections to Cape Town.
Rival European, Gulf and other African state-owned carriers have all profited from
expanding routes to the tourist hub instead.
SAA is also having to get to grips with its parlous finances,
having recorded a R5.7bn loss in its 2017-2018 financial year.
”Doubts about SAA’s viability were exacerbated last month
when finance minister Mr Mboweni suggested
that the government may cut its losses and shut down the carrier
— comments that unnerved creditors.
The attempted turnround at SAA was
“unlikely to sort out the situation, in my view we should close it down”,
Mr Mboweni told investors in New York.
The statement earned a rebuke from Mr Ramaphosa,
who countered that SAA’s debts would become payable immediately if the state abandoned the airline.
This could wreak havoc with public finances if it led lenders to doubt the creditworthiness of other state companies,
he told MPs after the finance minister’s remarks.
The row, which left Mr Jarana scrambling to calm what he admitted was “panic in the markets”,
reflected a growing sense that some of the state institutions undermined during Mr Zuma’s rule might never be saved.
Executives argue that there is little choice but to press on with the turnround
given the precarious nature of the airline’s debt.
As Mr Ramaphosa warned,
defaulting on one loan to SAA would trigger repayment clauses in its other sovereign-guaranteed debts,
presenting straitened public coffers with an upfront R16bn bill.
Thabang Motsohi, a consultant with decades of African aviation experience,
said “SAA can be salvaged,”
but only if politicians were willing to give its management the space they needed to focus on what worked and
ruthlessly cut what did not.
He said the company should look to Ethiopian Airlines,
which “takes decisions very fast if they decide to implement or cut a route. Here, it takes months.”
Mr Motsohi, who until recently was an adviser to Mr Jarana,
also pointed to pockets of success such as SAA’s domestic market.
Despite tough competition, the company operates a profitable low-cost carrier
and owns a valuable stake in a regional feeder airline.
https://mg.co.za/article/2018-12-19-mad ... r-salariesMad scramble to secure broke SAA December salaries
19 Dec 2018 17:11
Crippled state airline South African Airways cash crunch
could steal the festive cheer for employees there
as they were informed their December salaries could be paid
after Christmas or not at all.
Several anonymous sources at Airways Park said
Chief Executive Vuyani Jarana informed General Managers and heads of departments this week
that salaries, which are normally paid on December 21 and 22,
would only be paid on the 27th for junior staff members,
while senior management would be informed later when to expect their monies.
One said they were told by managers “there’s no money for salaries” and that they were trying to source funds.
https://mg.co.za/article/2018-12-19-mad ... r-salariesWe have secured favourable outcomes following our engagements with the lenders
where the banks have in principle agreed to provide funding to SAA
until the end of March 2019,” he added.
https://mg.co.za/article/2018-12-19-mad ... r-salariesFor this reason, we have communicated with all employees that they will receive their salaries on 24 December 2018.”
This latest issue comes on the back of a report that
Jarana was considering calling it quits after a fallout with the board.
Last week Business Day reported that SAA’s shareholder,
Public Enterprises Minister Pravin Gordhan stepped in
to persuade the former Vodacom executive against resigning.
Among Jarana’s biggest frustrations would be the airline’s perilous financial situation,
which is so dire that Jarana told parliament last month that he required R 3.5-billion,
some of which would be working capital, by December.
If he secures this, he will require another R17-billion,
R9-billion of which will be for servicing the debt that matures next March.
SAA has received R15-billion in government bailouts in the last year,
the latest of which was a R5-billion appropriation
by Finance Minister Tito Mboweni in October.
The airline made headlines earlier this year
when the M&G reported that it was splurging millions
on new executives and consultants.
At the time Jarana said it was hard to convince
capable executives to join the airline because of its bad reputation.
https://liveandletsfly.boardingarea.com ... -emirates/Cash-strapped South African Airways has turned to Emirates in a bid to turn around its dire financial situation.
I’ve written about South African Airways several times, but stopped recently because I was just writing the same thing, over and over. Another debt deadline, another bailout. The carrier continues to hemorrhage cash and post massive losses. As 2018 draws to a close, it has been eight years since SAA posted a profit.
Enter Emirates, who has agreed to expand its codeshare relationship with South African Airways.
...SAA CEO Vuyani Jarana resigns
Jun 02 2019 07:52
SAA CEO Vuyani Jarana has resigned,
and is prepared to work a three-month notice period until August 31, 2019.
According to his resignation letter to SAA board chairperson JB Magwaza,
the CEO unpacked how uncertainty about funding and slow decision making processes
were delaying the airline's turnaround strategy.
"The strategy is being systemically undermined,
https://www.fin24.com/Economy/saa-ceo-v ... s-20190602Jarana also raised "the speed of decision making" as a concern.
"It is impossible to succeed in the turnaround
with the current level of bureaucracy we have to go through to implement strategy."
SAA must get approval from the Department of Public Enterprises (DPE) and Treasury
to implement key decisions.
Jarana said that doing so was not a problem,
however it takes away "agility" for an entity like SAA which is in financial distress.
"Ways of working between the executive, the board and minister (without apportioning blame)
have made it difficult to operate with required speed and agility.
"Lines of accountability are becoming increasingly blurred
about what operational decisions are in my domain,
which are in the board's domain and
which are in the minister's domain.
Trust levels are very low impacting ways of working," he said.
According to Jarana the majority (60%) of problems at the airline are internal-
within the control of management, staff, the board and the shareholder which is government.
Market challenges only account for 40% of its challenges.
https://www.bloomberg.com/news/articles ... ess-rescueSouth African Airways to Enter Into Bankruptcy Protection
4 december 2019 20:13 Updated on 5 december 2019 6:33
Last-ditch measure is aimed at preventing carrier’s closure
SAA last made a profit in 2011, is reliant on state bailouts
South Africa’s government will place the national airline under a local form of bankruptcy protection as a last-ditch measure to try and prevent its total collapse.
State-owned South African Airways is entering a business-rescue process
to allow a “radical restructuring” under which the carrier will receive 4 billion rand ($274 million) in funding,
Public Enterprises Minister Pravin Gordhan said in a statement Thursday.
The process will allow SAA to continue operating.
SAA, which last made a profit in 2011and has received 57 billion rand in bailouts since 1994,
has been struggling to pay its bills after the National Treasury balked at providing it with more funding.
Its finances took a further hit when staff staged a pay strike last month,
grounding a number of flights and causing bookings to be canceled on a number of others.
South Africa’s Companies Act enables firms in financial distress to file for business rescue.
If granted, a business-rescue practitioner is appointed to help the company reorganize and assess whether it can be turned around.
Companies in the process of being rehabilitated
are protected from liquidation and legal proceedings,
enabling them to keep trading.
Gordhan said the business-rescue process at SAA will include:
-Existing lenders to SAA will provide 2 billion rand of “post-commencement finance”
guaranteed by the government and repayable out of future budget appropriations to enable SAA to continue to operate
-The Treasury will provide an additional 2 billion rand of funding in a “fiscally neutral manner”
-The full recovery of capital and interest on existing debt provided to SAA
by existing lenders that is the subject of existing government guarantees will not be impacted by business rescue
-A review of the airline’s cost structure will be conducted,
with a simultaneous effort to retain as many jobs as possible.
SAA has more than 5,000 workers, and the SAA Group of companies employs thousands more.
SAA spokesman Tlali Tlali said the company’s board will announce the appointment of business-rescue practitioners in “the near future.”
It also plans publish a new provisional flight timetable “shortly,” he said in an emailed statement.
Labor union Solidarity filed a lawsuit last month aimed at forcing the airline into business rescue,
saying the measure was needed to guard the interests of workers and taxpayers whose money was being squandered.
Other labor unions, such as the National Union of Metalworkers of South Africa,
have opposed talk of restructuring the airline or selling a stake to private investors.
That’s in line with most unions in South Africa,
which have threatened strikes if the government attempts to reorganize state companies and cut jobs.
Taxpayer Burden
“By placing South African Airways under business rescue,
the South African government effectively outsources the hitherto politically unpalatable (but essential) work of restructuring the failing national carrier to non-ANC hands,”
said Daniel Silke, the director of Cape Town-based Political Futures Consultancy, in a Twitter posting.
The ANC is South Africa’s ruling African National Congress.
The main opposition Democratic Alliance welcomed the government’s decision to voluntarily place the carrier into business rescue,
saying this was the only viable option to prevent it from placing any further burden on the economy and taxpayers.
Breaking: South African Airways Puts Airbus A340 Fleet Up For Sale
January 15, 2020
Cash strapped South African Airways has launched a new fundraising initiative.
In a bold move,
the airline is looking to sell off a number of its A340 aircraft
as well as spare engines and auxiliary power units (APUs) for those planes.
...see the list of to be sold aircraft atthe airline is requesting bid to buy a number of its A340 aircraft.
In total, there are nine A340s up for sale, as well as 15 spare engines and 4 APUs.
The aircraft that are up for sale include four A340-600s and five A340-300s.
The tender has been live since the 10th of January 2020,
and interested parties have until the 30th January 2020 to submit their bids.
It appears that the sale is linked to a ‘business rescue’, as it states in the proposal:
Bizarrely, many of these aircraft are still in active service, as can be seen at
https://simpleflying.com/saa-a340-sale/ .
Altogether SAA has seven A340-300s and nine A340-600s in its fleet.
This sale will, therefore, see SAA disposing of a large portion of its A340 fleet.
...more thru20 March 2020
South African Airways (SAA) has announced that it will immediately suspend all international operations until 31 May 2020
in response to a government travel ban
aimed at stopping the transmission of the Coronavirus (Covid-19).
The COVID-19 pandemic and attendant travel restrictions,
resulted in substantial decline in demand for air travel.
The situation caused many airlines across the world to ground aircraft, release their employees, and to cancel flights.
In the case of SAA, this decision means that SAA will only render services on its regional and domestic routes.
https://www.reuters.com/article/health- ... SL8N2BH8FLMARCH 24, 2020 / 8:38 PM / UPDATED 16 HOURS AGO
JOHANNESBURG, March 24 (Reuters) - South African Airways (SAA) said on Tuesday
it will suspend all its domestic flights from Friday to April 16
in support of the national lockdown to curb the spread of the coronavirus.
President Cyril Ramaphosa announced a 21-day lockdown from midnight on Thursday
in an address to the nation on Monday,
https://www.reuters.com/article/safrica ... SL8N2DL1C2June 8, 2020 / 9:47 AM / Updated 5 hours ago
South African Airways administrators ask to delay rescue plan until June 15
JOHANNESBURG, June 8 - Administrators at state-owned South African Airways asked creditors on Monday to approve another delay until June 15
for the publication of a business rescue plan for the cash-strapped airline.
The plan was meant to be published on June 8, after several earlier delays.
The administrators said in a letter to creditors that their latest request to delay the plan
followed a letter from the attorneys of trade unions representing SAA employees asking for an additional one-week delay.
05 Jun
Aviation experts explain why 'bizarre' SAA draft rescue plan cannot fly
Of the several stories that have dominated South Africa's daily discourse over the period of the lockdown,
the fate of South African Airways has been an ever-present feature.
With airlines grounded for the majority, its already tenuous position has become more dire by the day
as business rescue practitioners and its sole shareholder and biggest creditor decide on its future.
This coming Monday, the practitioners intend to deliver a long delayed rescue plan for the struggling airline that will be voted on.
A proposed draft of the plan, seen by Fin24,
calls for taxpayers to cough up about R4.6 billion more to save the debt-laden struggling national flag carrier.
Furthermore, it does not say how provision will be made
for a further about R20 billion in losses foreseen during the first three years of operation.
...continues thruOne of the experts, who spoke to Fin24 on condition of anonymity,
finds it "bizarre" that the draft plan can even be described as a "rescue plan" for SAA.
"Honestly, they are going to struggle to find a private equity partner
who is going to be happy to burn through R20 billion before anything happens."
https://www.bloombergquint.com/business ... k-on-fundsAugust 05 2020, 9:05 PM
The planned business rescue of South African Airways
is in limbo because government attempts to raise 5.3 billion rand ($307 million)
of immediate funding from commercial banks failed to elicit a response,
a person familiar with the situation said.
The administrators of the state-owned airline can’t hand over the business to management
because it is insolvent, the person said.
The banks were approached
by representatives of the Department of Public Enterprises and the National Treasury, the person said,
asking not to be identified as a public state
SAA hasn’t made money since 2011 and has survived on government bailouts
-- a situation Finance Minister Tito Mboweni has said is unsustainable.
He has undertaken to try and “mobilize” 10.3 billion rand the airline needs to keep flying
from private equity, pension funds or “strategic partners.”
The Department of Public Enterprises declined to comment. Treasury said funds are still being mobilized.
Business Day reported the failure to win bank funding earlier.
Continues atSouth African Airways suspends its operations amid lack of funding
30 September 2020
Ailing airline South African Airways (SAA), in “business rescue“-modus as from December 2019, has suspended its flight operations. The struggling South African flag carrier – loss-making for over a decade, despite multiple state bailouts – failed to get the necessary funding to continue its operations.
https://www.ch-aviation.com/portal/news ... a319-fleetSouth African Airways to exit A340, A319 fleet
14.10.2022 - 02:29 UTC
South African Airways (SA, Johannesburg O.R. Tambo) is replacing its only remaining A340-300
with a similar capacity aircraft
and will exit its A319-100 fleet in 2023, says Chief Commercial Officer Tebogo Tsimane.
The A340-300 is currently used as a spare
to support the schedule during required fleet maintenance
or when capacity demand requires the deployment of a larger aircraft.
SAA is also leasing three more A320-200s, bringing the total number of A320s in its fleet to five
to support expected high-capacity demand as South Africa's peak summer holiday season approaches in December 2022.
As reported, the first of these - ZS-SZD (msn 6007) - was delivered on September 25, 2022, and is currently in maintenance in Johannesburg. The rest will be delivered monthly thereafter.
Over the last two weeks, SAA has also switched on some days from a narrowbody A320-200 to a larger widebody A330-300 on two of its busiest routes to Harare Int'l (Zimbabwe) from Johannesburg O.R. Tambo and Cape Town.
SAA currently operates seven Airbus aircraft, including;
three A319-100s leased from Castlelake;
two A320-200s leased from GECAS and Goshawk;
one A330-300 leased from Aergo Capital; and
one in-house A340-300.
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