Finance Minister Tito Mboweni has clarified the use of more taxpayer funds to bail out South African Airways (SAA), saying the government has not committed to funding the troubled airline’s restructuring process.
What it proposes doing instead is to ‘mobilise funding’ for SAA by possibly approaching strategic equity partners, local and global investment institutions, and managers of pension savings to inject money into a new restructured airline.
Private sector investors might be given a shareholding in the airline, but shareholding the government will retain is undisclosed.
‘At this stage, there are various options being considered and no definitive decisions have been taken,’ said Mboweni.
The potential mechanisms for funding SAA are contained in Mboweni’s court papers in response to an application by the Democratic Alliance (DA) at the High Court in Pretoria to interdict him from raiding the fiscus to bail out the airline.
At least R10.1-billion is required by the SAA business rescue practitioners, Siviwe Dongwana and Les Matuson, to implement the business rescue plan by paying the airline’s creditors, funding retrenchment packages for 2 600 workers and restarting commercial flight operations by January 2021.
Last week, Mboweni signed a letter to the business rescue practitioners saying that he and minister of public enterprises Pravin Gordhan would mobilise funding for the ‘short, medium and long-term requirements of a new SA national airline’.
The DA had averred that Mboweni would source R10.1-billion from public finances, which is over and above the R57-billion in government bailouts the airline has received since 1994.
IRR analysts suggest that if Gordhan thinks private partners will accept a minority shareholding in any deal, he has learnt nothing from this exercise.