Over R33 billion has been spent on the South African Airways in the past five years, Public Enterprises Minister Pravin Gordhan has revealed.
He revealed this in a Parliamentary reply to the Democratic Alliance’s Farhat Essack, explaining how the money has been used to help assist SAA since 2019.
Essack asked the minister for a breakdown of the total amount of public money that has been used to bailout SAA since May 2019, and moreover, what has SAA been able to pay out in dividends over the past five years.
The minister said that it was important to note that all State-Owned Companies (SOCs) had been severely impacted by state capture and this had impacted their liquidity position, operating costs, and operational performance.
Gordhan also said that state capture compromised several boards within these institutions.
“The entities began stabilising and recovering from the effects of state capture as the new administration started addressing the state capture,” the minister said.
Gordhan made it clear that no bailouts were provided to SOCs, but rather capital was invested in SOCs to put them on a path of sustainability.
He said that since then, the SOCs have progressed towards sustainability.
SAA’s financial challenges
The minister acknowledged that the airline has been facing significant financial and operational challenges.
“This was partly due to several challenges which among others, included state capture and corruption. As a result, the airline was placed in business rescue by its board, effective December 2019 to enable a comprehensive restructuring of the company and its balance sheet to ensure that a viable, competitive, and sustainable airline emerges,” Gordhan explained.
He added that funding was given to enable operations to continue while the business rescue plan was being developed.
The business rescue plan was developed and the creditors adopted the plan in July 2020.
“The airline was later restructured, staff right-sized, significant compromises reached with creditors and the business rescue was exited in April 2021,” he added.
Government funding to SAA
| Year | Capital invested | Dividends |
| FY2019/20 | R 5.5 billion | Nil |
| FY2020/21 | R18.2 billion | Nil |
| FY2021/22 | R6.8 billion | Nil |
| FY2022/23 | R1.6 billion | Nil |
| FY2023/24 | R1 billion | Nil |
An explanation of the funding
During the 2019 to 2020 financial year, government invested R5.5 billion in SAA. This was broken down into R2 billion for working capital and R3.5 billion to settle lenders bridging finance.
In the 2020-2021 financial year, SAA was given R18.2 billion and thus was broken down as follows:
R2.2 billion - Settle Business Rescue (BR) post commencement finance
R4.4 billion - Settle lenders legacy debt
R3.6 billion - Settle Development Bank of Southern Africa (DBSA) BR post commencement finance
R7.8 billion - Implement BR plan
In the 2021-2022 financial year, government forked over R 6.8 billion, and R4.1 billion was used to settle lenders legacy debt. R2.7 billion was used to restructure SAA’s subsidiaries, according to Gordhan.
In the 2022-2023 financial year, government paid SAA R1.6 billion to again settle lenders legacy debt.
Finally, in the last financial year 2023-2024, government has given SAA R1 billion to further implement the business rescue plan.
SAA is looking for investors after equity deal collapse
In late April, SAA said it was looking for potential minority investors as it reels from an equity deal that collapsed in March.
Derek Hanekom, interim board chairperson at SAA said that the carrier is looking not only for investors, but is seeking access to capital markets and loan financing for the embattled airline.
Hanekom said that SAA would have to rethink its choices since the collapse of the Takatso deal.
He emphasised that all potential new investors would have to note that the deal to buy into SAA would be a minority share, as government wants to maintain its majority stake in the state carrier.
In March, Gordhan said that negotiations for the 51% sale of SAA to the Takatso Consortium would be scrapped.
The failure of the deal has meant that SAA has also had to delay the opening of several international routes that would have seen the carrier travelling to Frankfurt, London and North America.
Hanekom said that a capital injection would lead to more expansions, but maintained that SAA is growing slowly and at a sustainable rate.
He said that more money coming into SAA from investors and capital markets would mean that taxpayers would not have to foot so much of the bill to maintain and grow the airline.
“If we are able to get capital from whatever source, then we may be able to expand more rapidly,” Hanekom said.
Hanekom concluded that South Africa hoped to grow its fleet from 13 to 21 aircraft in the next financial year and would like to see routes to more African states, Australia and Brazil.
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