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South Africa Budgets More Funds for SAA and SA Express
In a briefing on Wednesday to the Parliament for the South Africa Department of Public Enterprises (DPE), acting Director-General Kgathatso Tlhakudi presented the department’s budget plan for state-owned South African Airways (SAA) and SA Express airlines.
South Africa’s government is being asked to set aside R3.8 billion ($212 million) for SAA and R164 million ($9.2 million) for SA Express in the current 2020/2021 fiscal year. These funds are not considered COVID-19 rescue funds but instead part of the carriers’ primary operating budget allocations.
The SAA and SA Express budget proposals represent an approximate 30% and 50% reduction for the respective carriers’ government funding amounts from the previous fiscal year.
SAA’s budget proposal also includes R4.3 billion ($240 million) for 2021-22 and R1.77 billion ($100 million) for 2022-23.
DPE Deputy Minister, Phumulo Masualle, advised the committee that the state-owned airlines have been dealing with financial difficulties before the outbreak of the COVID-19 pandemic and the pandemic has made things significantly more challenging.
During the hearing, the parliamentary committee expressed its concern for the employees of the state-owned airlines, who are facing possible retrenchments and are not being paid. The committee criticized the department for not providing an effective COVID-19 recovery plan or solutions for the challenges facing the two carriers.
South African Airways (SAA) reported an R16 billion ($896 million) loss for the last three years to the Standing Committee on Public Accounts (SCOPA). The airline has not turned a profit since 2011 and has received R57 billion ( $3.2 billion) in government funding since 1994.
SAA has been successful in reducing operating costs for the last three years but fuel and employee costs have increased in the same time period. The airline has been working to optimize flight schedules and retrench staff to save money.
The DPE has oversight over SAA, which is under business rescue, and SA Express, which has been placed under provisional liquidation
SAA’s business rescue practitioners are expected to submit a business rescue plan at the end of May.
Reports indicate that SA Express is close to the edge of closure. Employees have already had their employment contracts suspended without pay as part of the provisional liquidation process which started on 29 April 2020, and several employees have been told to not report to work.
Masaulle said the matter at SA Express does not “sit well” with the DPE and they want relief to be provided to the airline’s employees. “The future of SA Express must be decided very soon, so the situation that the workers find themselves in be brought to an end,” said Masaulle.
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