The South African government has not committed to the funding requirements defined in the South African Airways (SAA) Business Rescue Plan (BRP), a cabinet minister has said.
Answering an affidavit to a case filed by the Opposition Party Democratic Alliance (DA), Finance Minister Tito Mboweni said: “The announcement had committed the government to mobilize funds for South African Airways and not to provide them.” These include seeking money from strategic partners or private equity as well as tapping pension funds and global financial institutions.
The SAA Business Rescue Plan requires US$610 million and will see only 1000 of the work force being retained. SAA has in the recent weeks been returning leased aircraft back to the lessors and this week started issuing 2700 staff letters of redundancy.
Meanwhile the DA issued a statement welcoming the commitment by the Minister of Finance not to use the Emergency Powers to bail out SAA. “(DA) welcomes Finance Minister Tito Mboweni’s categorical commitment, under oath, not to use his “emergency” powers to bail out South African Airways (SAA) and that there is no “imminent” plan to do so.
“However, Minister Mboweni’s affidavit, belatedly filed in response to the DA’s court challenge, raises new alarms about how SAA might be bailed out using other means. Most worryingly, he suggests using pension funds to “invest” in SAA, which raises the prospect of the Public Investment Corporation being forced to give money to SAA,” the statement reads.
The Party however raised concerns on the alternative means to raise funds for SAA. DA said it will oppose any funding bailout of SAA, whether through direct cash, government guaranteed loans or pension fund abuse.
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