SAA has made a plea for more money, asking for another R3.5bn from the budget, but finance minister Tito Mboweni has said he is yet to decide on the validity of the request.
The additional funding is required to fund the business rescue process, the cost of which has risen from R10.5bn, when originally agreed, to R19.3bn, the Treasury said in the Budget Review.
In the October medium-term budget policy statement, SAA was allocated R10.5bn to fully fund the rescue plan. At the time, minister of public enterprises Pravin Gordhan said it was the last time the airline would need financial support from the fiscus.
In comments at a press briefing after the budget speech, Mboweni said: “There is no allocation in this budget for SAA. The business rescue practitioners have made a request for R3.5bn. That still has to be interrogated to get to the veracity of it.”
The Budget Review states that the business rescue plan had been amended in September 2020 and “the identified funding requirement was increased to R19.3bn. Of this, R14bn was envisaged to come from the government (including the R10.5bn allocated in 2020/2021, with the remainder sourced from strategic equity partnerships.”
The government has said that several possible strategic equity partners have been identified and are under consideration by the board.
In addition to these amounts, the government will complete the repayment of R16.4bn of historic SAA debt — some of which has already flowed to financial institutions — which it committed to in February 2020.
State arms manufacturer Denel, on the other hand, received no additional funding from the budget, despite its dire financial position. It has been unable to pay full salaries for much of 2020 or adequately fund operations. Interim CEO Talib Sadik stepped down from the position last week. The Treasury previously suggested that Denel should look to the department of defence for financial support.
Eskom, which is on a programme of annual rolling bailouts from the Treasury, was allocated R31.7bn in the budget. In 2020/2021 it received R56bn in support. The bailouts are a stopgap approach to Eskom’s debt crisis: the company has accumulated R488bn of debt, which it is unable to service from operations.
In February 2019, the government said it would provide R23bn a year in support, but this has morphed into larger amounts. Treasury official Ravesh Rajlal said this was a matter of the “scale and pace” of funding, not a change to the overall plan.
A bigger solution to the debt problem — in which R280bn or so is removed from Eskom’s balance sheet — has been talked about for several years but no reference to this was made in budget documentation.
The Treasury also said the government had bought R2.3bn of preference shares in the Airports Company SA (Acsa) in 2020, which was contained in the Second Adjustment Appropriation Act, gazetted in January.
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