SAA bankrupt - again

[Selfloader]

According to today's Business Day, SAA's CFO says the airline's
debt exceeds its equity by 10%. That means it is bankrupt.
And how soon does this come after the last bailout of a billion or so?
I think it was last year, at the most the year before. And says the chief bean counter, SAA needs another hand out.
Yesterday SAA ran an advert in the same paper along the lines of "See how far we've come in the last 75 years". Yeah, right. The airline is in the worst state it has ever been in the last 75 years. It is time SAA was privatised and taxpayers relieved of this millstone.

[WhinerLiner]

Amen to that

[I.R.PIRATE]

They can't privatise SAA. Then the fat cats will have to pay for their own tickets.

[PhoenixDC]

Now let’s see, SAA has just been bailed out again by the taxpayer, to the tune of R1.6B
Comair, 1Time etc. are all solvent, making a profit and paying taxes.
Nice merry-go-round, where you support your insolvent competition, and on top of it all they still fail to make it in the trading of informal recreational products.
It would be nice of Uncle Automatix, to perhaps bail out the rest of the SA Aviation community, with R3.2B?
Sure wish I was in a position to run a business like this!

[evanb]

Bankrupt has a specific meaning: unable to make its obligations, none of that has happened, it may, but not yet!

[fsx]

Close the shop and switch off the lights.:D:D:D:D

[davidash]

Actually the correct term is insolvent. In South Africa a creditor may apply for the liquidation of a company when its assets exceed its liabilities. Call it what you like - SAA is broke! However, this is not the fault of those employees who have served it loyally and carefully. It is the same problem as the whole world. Financial wizards with hedging, leveraging, buying forward, securitising et al that have caused the problem. Whether you are running an airline or selling widgets, the effect of financial meddling is the same. Don't blame poor old SAA.

[WhinerLiner]

Sorry not sure if we are all talking about the same airline. Far as I know SAA has enjoyed the following over the last month:

Crew have been detained 2 in a month for drug trafficking
CEO is on special leave because he was caught screwing the pooch
The airline loses more and more and more money

Its not a global downturn that got SAA on the backfoot. This is the trench from which they operate.

And whoever the loyal staff are serving, I can assure you is not the customers. The 'service' you receive seems is so poor it's difficult to describe to anyone that hasn't actually been on the receiving end of it.

Anyone that takes a paycheck home from that place should personally thank every taxpayer they meet.

[divinehover]

Just like EK. Subsidised by the powers that be.

Just like BA in the past. Subsidised by the power that be.

Looking at all the Gov bailouts been handed out aroung the globe I suddenly don't feel so bad.

AA, Delta, United ect had Ch11 protection. SAA gets a few bob from the Govt every now and then.

Come now girls., your whining.

[Solid Rust Twotter]

Bankrupt has a specific meaning: unable to make its obligations, none of that has happened, it may, but not yet!

Without the bailouts that's precisely where they'd be.

Just because others are also doing it/have done it in the past, doesn't make it right.

[johan_jnb]

a para-statal entity cannot be bankrupt... unless the state or goverment has no reserves left.

SAA is goverment owned and funded, they have no real obligation to make money:}, so we cannot say they are bankrupt, nor a 'real' business in my opinion :bored:.

[WhinerLiner]

Many other companies certainly have been bailed out, but usually they don't require it every year. But I'm sure there is some fuzzy logic used in the building to dodge that little reality.

Chapter 11 protection is a very different thing.

[divinehover]

Yes Whineliner Ch11 is very diff. It means you don't have to pay your debt on time or not at all. Very capatalist. What's the diff between not having to pay your debt and getting someone else to do it.

[Selfloader]

Semantics and legalese. When debts exceed your assets your creditors (usually the bank) can force you to sell up for payment of the
monies owed. When that happends your are declared bankrupt. However, even if that is not the case, the airline can, at certain levels, be declared morally bankrupt.

[evanb]

SAA is not insolvent! A creditor may only apply for liquidation if an obligation is not met. Liabilities exceeding assets is not a good enough reason for a court to grant a liquidation order unless the claim is made by the company itself (called a voluntary liquidation).

Many companies have been liquidated where their liabilities did not exceed their assets (like Saambou) which is a result of poor liquidity rather than insolvency or bankruptcy! SAA may be insolvent but it is not bankrupt and it is not at anytime not going to meet its financial obligations since they are guaranteed by the state - that is what the subordinated financing that they are talking about means. The idea from SAA is to get the subordinated debt converted into equity to strengthen the balance sheet!

SAA might be in trouble but some of the things being said on here are more rediculous than some of the decisions by those mamparas as SAA!

[Solid Rust Twotter]

Remove the annual/bi-annual bailout and they're finished.

...And it's ridiculous.

[Selfloader]

EvanB do me a favour: The airline IS technically bankrupt. You start your last post thus: "SAA is not insolvent"... but later add: "SAA may be insolvent but it is not bankrupt" .... Make up your mind.
My Collins dictionary defines bankrupt thus: a person adjudged insolvent by a court, his or her property being transferred to a trustee and administered for the benefit of his creditors 2. any person unable to discharge all his or her debts ...
The dictionary does not distinguish between bankrupt and insolvent.
No one is suggesting that the state is bankrupt and cannot pay SAA's debts. However the entity - SAA - most certainly is. It is a subsidiary of the parent company which, if it chooses, will refinance the debt which SAA is unable to service, hence the request for another R1.6bn!
Now let's move on chaps, this is becoming tedious.

[Saabflyer]

fsx:

You would not say the same if you were an employee of this airline....

[unstable load]

What's the diff between not having to pay your debt and getting someone else to do it.

That probably depends on whether you OWE or are OWED, doesn't it? If I was owed I know which one I would prefer.....

You would not say the same if you were an employee of this airline....

Probably not, but it would not change the reality that it is indeed true.

I saw elsewhere that someone at SAA had remarked that "in a decade we have not been able to find an effective CEO"(not verbatim). I wonder if that was a tacit admission that finally the realisation is dawning that BEE may not actually be effective??

[davidash]

Guys, believe me. I have been a lawyer for about 37 years - SAA is insolvent - not bankrupt (the expression is a not used in SA Law). Insolvency is a simple matter of whether your liabilities exceed your assets. This is a ground for winding a company.
Inability to pay your debts on its own is also a ground for a winding up - even where your assets exceed your liabilites. The fact that is is a para-statal is irrelevant. If the shareholder (the Govt) decides to abandon SAA then that would be the end.
Sorry for the legalese but had to correct a few things.
The comment that is probably most accurate is that SAA desperately needs an experienced hard-nosed CEO to guide it through the next few years. It is interesting to see that Mr Colin Viljoen has managed to put SAA engineering back in the FAA good books. Someone like him who understands the airlines might be the answer.

[thincatblue]

Thanks davidash, at last some sense. I can't believe that most of the preceding drivel comes from airline professionals? They would be more at home with the ANC youth league, would fit right in with Julius M's rationale!

Viva SAA loyal staff and professionals that are trying to make a difference - VIVA!

[777Contrail]

OK.

So SAA is insolvent.

Not bankrupt.

JUST insolvent.

They can't pay their bills, for whatever reason.

Other companies that can't pay their bills are also "insolvent".

BUT other companies do not have the taxpayer's deep pockets, therefore they close down.

SAA is insolvent, but don't have to close down.

YET.

[PhoenixDC]

If Sabena and Swissair were allowed to go under, with their far larger and wider tax bases, can the Fat Cat politicians in South Africa not see where this is going?
I suppose it is a case of living in Cloud Cuckoo Land, with the firm belief that the Honkeys can always be milked for some more folding stuff.

[PAXboy]

African politicians still want 'their' airline. They still believe that it is a symbol of them (as indeed it is - but NOT in the way they think it is!).

You all know that SAA is not going to be sold off when they have just started selling tickets for some football matches to be held next year.

European governments wised up about national airlines in the 1980s and 90s. For African countries, it usually has to wait until things are VERY much worse than now, before they are allowed to go to the financial wall. Don't forget that you will soon have a new President who intimately understands the business of putting up a good show and he will want his pretty little airline to be there - even though he will never travel on it.

Just keep on paying the taxes ...

[Shrike200]

In a recent government meeting regarding SAA, the first item that came up was not (believe it or not) the dismal financial state it's in, but 'Gold Card' type membership for government ministers to allow cheaper travel, akin to British Airways' setup for the UK govt'. That's a good indication of their train (gravy-filled, no doubt) of thought I would say.