The embattled SA carrier, South African Airways (SAA) has until the end of October 2017 to honour another R5bn debt obligation, this time to local lenders.
In a report to Parliament,South African Finance Minister Malusi Gigaba said local lenders may be willing to extend the deadline beyond the end of October to end-March 2019.
However, the deadline may be extended, on condition that Gigaba announces an equity injection into SAA when he tables the medium term budget policy statement (MTBPS) on October 25.
Despite this, Gigaba does not have the final say on the equity injection.
This needs to be approved by Parliament in terms of the Public Finance Management Act (PFMA) before it can take effect.
This means that the legislator will have six days to do so before the end of October.
South Africa’s opposition party, The Democratic Alliance (DA) has criticised Gigaba’s current position.
Gigaba has “‘dug himself into a hole”, said DA spokesperson on SAA, Alf Lees.
“It is not practically and legally possible for parliament to approve an appropriation bill by the 31st of October and so the conclusion must be that Malusi Gigaba has informed the banks and other domestic lenders that parliament will indeed approve the equity injection at some date after the end of October.”
“If this is the case it would be a very serious indictment and would simply reinforce the existing perceptions amongst South Africans that parliament is just a rubber stamp for any and all the decisions of President Zuma and his Cabinet”.
Telkom is safe
On the home front, Telkom is safe from losing its 39% stake.
Telkom announced on Thursday that it had removed its cautionary notice regarding government’s plan to sell its 39% stake in the firm (valued at about R13bn).
This comes after National Treasury said this was because the option to sell this stake to fund the bailout was no longer an option.
However, on Thursday Treasury spokesperson Mayihlome Tshwete said in a report: “There is a plan and it is going to be announced fully in the medium-term budget statement. The plan is far advanced and has been discussed with the president and a presidential committee of a small group of ministers”.
Parliament is believed to be in the process of obtaining a legal opinion about the legality of National Treasury’s decision at end-September to invoke section 16 of the PFMA to give another R3bn lifeline to SAA.
SAA’s total guarantees
SAA’s total guarantees currently amounts to R19.114bn of which R16.366bn has been used.
Added to SAA’s plight, Gigaba’s Medium Term Budget Policy Statement in two weeks time is much anticipated as it will shed light on how SAA will be funded to stay afloat.
Discussions are reportedly underway with the merger of SAA with Mango and South African Express to assist with SAA’s debt-ridden crisis.
Despite the large cash injection SAA has received, the national carrier is still struggling to survive.
Notably, in August, SAA announced plans to cut down on flights, in a bid to reduce operational costs.
This follows the airlines monthly losses of approximately R340m.
– BUSINESS REPORT ONLINE