South Africa will give a further ZAR16.4 billion (USD1.06 billion) over the medium term to struggling South African Airways (SA, Johannesburg O.R Tambo) to allow it to repay guaranteed debt and cover debt-service costs.
The National Treasury disclosed the figure in its 2020 budget review released on February 26 as it announced USD3.5 billion in government spending for both SAA and the troubled state-owned power utility Eskom over the next three years.
“Over the medium term, authorities have allotted ZAR16.4 billion to settle guaranteed debts and interest. The related restructuring costs may be reprioritised within the funds,” Finance Minister Tito Mboweni told the country’s parliament amid growing criticism from opposition parties over the ongoing bailouts of large state-owned enterprises.
“It is the very sincere hope of many that this intervention will lead to a sustainable airline that is not a burden for the country,” he added.
Others disagreed, with Alf Lees of the opposition Democratic Alliance saying: “It is outrageous that funds desperately needed to stimulate the economy and the creation of jobs are poured into the SAA vanity project.”
South African Airways would not dare to publish its financial statements from the last two years because it would almost certainly be liquidated if it did, Public Enterprises Minister Pravin Gordhan admitted to parliament last week, City Press reported.
Failure to publish the figures means the company is in contravention of the Public Finance Act, which compels state-owned enterprises to publish annual reports within a month of the accounts being audited, the minister was warned.
However, Melanchton Makobe, acting deputy director-general of public enterprises, pointed to a clause in the legislation that allows state-owned companies to hold back their results if the minister has a good reason for it. Gordhan had indeed provided a valid reason, Makobe said; that SAA would immediately be liquidated if it did, as it has not been operated as a going concern since 2012.
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