Board Chairperson Denies SAA is to be Liquidated

SAA’s board chairperson has denied that South African Airways’ future is at risk. John Lamola today dismissed claims that the state-owned carrier – which was once the pride of the nation – is facing liquidation due to delays in the conclusion of the strategic equity partnership (SEP) transaction with Takatso Consortium.

Lamola said the media reports have misconstrued comments made by Acting DG of the Department of Public Enterprises (DPE), Jacky Molisane, about the transaction.

“On Wednesday… SAA and the DPE were making a scheduled presentation to Parliament’s Portfolio Committee on Public Enterprises on SAA’s 2017/18 annual financial statements.

“An ancillary question related to the progress on the SEP transaction, in relation to funds outstanding from National Treasury for the conclusion of SAA’s Business Rescue Plan – answered by the Acting DG – led to a press story casting an impression that the future of SAA is in peril.

“The news that SAA will be liquidated if the SEP transaction is not concluded has been taken out of context, and the import of the statement made by the Acting DG is exaggerated and blown out of proportion.

“We are in constant contact with the Acting DG. Her views, which are based on a continuous management of all the regulatory, legal and commercial processes common to transactions of this nature, are aligned with those of the board of SAA. The SAA board is constantly monitoring and assessing the corporate risks associated with this transitional period SAA is going through,” he said.

After years of taxpayer-funded subsidies, a majority share in the airline is being sold to the private consortium. In June, current affairs show Carte Blanche investigated just how much the airline is worth, with many experts saying it is being sold for a fraction of its value. “So, how much is SAA truly worth? R3 billion? R6 billion? R10 billion? Or perhaps R3 000 000 051 in operating capital and shares the chosen equity partner will stump up,” said the show. (If you’re abroad, you can stream Carte Blanche, in most countries.)

Lamola acknowledged there have been delays in the conclusion of the SEP transaction, but played them down as ‘normal’.

“Typical of normal corporate governance protocols, a high-level risk management process involving both the DPE and SAA Board has been put in place to charter the future of SAA since the airline emerged out of business rescue, with a restructuring solution that entails the introduction of a private strategic equity partner to this State-owned company.

“The transaction is beset with delays emanating from legal requirements to comply with aviation regulatory conditions and the Competition Commission. We can confirm that both SAA and the DPE are working on a time horizon of end of March 2023 for the substantive conclusion of the transaction, as this period marks a reportable end of the current financial year 2022/23 for SAA,” Lamola said.

He said despite these challenges, the airline’s restructuring following the business rescue process has provided a platform for the carrier to succeed.

“As the airline celebrates its full year of successful operations, we are more than satisfied that we have built the foundation for a sustainable and growing airline business.

“The SAA board will do everything in its power to ensure SAA survives. As a company with an overhead cost structure and operating model that have been restructured by the business rescue process, and a transformed management culture, SAA is poised for a sustained growth.

“SAA management assures that there is a variety of resources within the company and a global aviation industry that can be innovatively exploited for the future success of SAA. We assure our customers and all our stakeholders and partners that there are no plans, nor an intention to see South African Airways liquidated,” Lamola said. – SAnews.gov.za