DA claims SAA business rescue plan relies on R32b govt bailout

Image credit: Flickr/Roderick Eime

The Democratic Alliance (DA) has rejected the South African Airways (SAA) proposed business rescue plan, claiming it would require a R32.65 billion bailout from the government.

The business rescue practitioners, Les Matuson and Siviwe Dongwana, finally released the plan late on Tuesday after repeated delays since their appointment in December last year.

In a statement on Wednesday, DA MP Alf Lees said it would ask Finance Minister Tito Mboweni to oppose the “ridiculous” bailout.

He added, “We will also write to the Competition Tribunal to request an investigation into this proposed SAA bailout, as we are of the view that it violates the Competition Act, as the airline will get an unfair competitive advantage over the other South African airlines – none of which have been granted bailouts but remained profitable.”


According to Lees, the plan’s proposed bailout would cover various aspects such as lenders, staff retrenchments, unsecured creditors, unused ticket claims and trading losses.

He said South Africa is currently going through a pandemic and economic meltdown and is facing a possible humanitarian crisis, which means that liquidation “is the only realistic option for SAA at this point.”

Lees added, “In no way, shape or form should the government be handing out R33 billion bailouts to a bankrupt blackhole of an entity that has not contributed anything to our economy for ten years.

“The fact that the BRPs think that spending this obscene amount of taxpayers’ money on an airline that is long past its last legs as the way forward is utterly ludicrous. It’s inhumane that it would even be considered.”

In February, Mboweni announced that the government had set aside R16.4 billion for SAA’s historic government-guaranteed debt. The struggling airline has suffered losses of up to R32 billion over the past 10 years.


The BRPs’ plan envisages that a restructured SAA would resume full domestic flights in January 2021, followed by regional and international schedules soon thereafter depending on demand.

In a statement, the Department of Public Enterprises said it was studying the plan and emphasised its vision of a “viable, sustainable national carrier.”

“Through government guarantees, the BRPs have had significant additional financial resources at their disposal to enable them to restructure SAA by stemming the tide of wastage, an excessive cost-structure and cash burn. We will assess the plan which, we are concerned, might have not been adequately accomplished,” it added.

The airline’s creditors will now have to vote on the plan at a date yet to be specified. Should they fail to agree on it, SAA could be liquidated.

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