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ANOTHER bail-out for SAA!!!

How do you walk past other pilots and look them in the eye and think: "My salary (if you can call it a salary), is paid for by begging!!" And yours, private, is not even worth mentioning!:yuk::yuk::yuk:

Its disgusting. That airline has burnt through R17b in 8 years.

But fear not, there will be another 'turn around strategy'. Every year its the same garbage, more losses and another turn around.

A bailout is a colloquial pejorative term for giving a loan to a company or country which faces serious financial difficulty or bankruptcy. It may also be used to allow a failing entity to fail gracefully without spreading contagion. The term is maritime in origin being the act of removing water from a sinking vessel using a smaller bucket

However you look at it SAA is still failing where clearly it should not.
What an embarrassment for South Africa considering other smaller African nations like Kenya and Ethiopia have such profitable carriers.
Maybe it is about time South Africa got it's head out of it's arse and PRIVATISED this symbol of national shame before there is nothing left to save!

Treasury grants SAA's R5-billion request | Business | Mail & Guardian

Any sign of a state bail-out for 1Time?

Does this mean that Comair is the only profitable airline in SA?

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What an embarrassment for South Africa considering other smaller African nations like Kenya and Ethiopia have such profitable carriers.

Ah, but I am sure those successful airlines don't have gold plated troughs at the front door for all the snufflers and random pilferati to help themselves from.....

I agree , the bail out or Recap whatever it is......is unfair.

However working for SAA as a Pilot is still :mad: awesome...I don't think you will find a better working environment and overall , a happy bunch of Pilots.

The massive waste of resources at S.A.A. is a mirror of our current countries leadership.

They are using our tax money to drive 1 Time out of business in the form of Mango. As they did with Nation Wide and Sun Air.

They have no aviation experience either operational and or practical of any consequence at board level. It is a classic case of Cadre deployment, as SAA is a gravy train that keeps getting extra gravy.( at our expense).

The want to buy aircraft as there is always jam for the inner-circle with these acquisitions. As their is never a list price per aircraft as these deals are always clouded with optional extra's that mask the fact that money is distributed to the few.

I am not a management hater but I am an incompetence hater. That is what S.A.A. is clearly! They have blown 17 Billion while selling off assets to stay afloat( slot at Heathrow:- a profitable route for well run airlines).

Now they want to push into Africa and the East thinking that African public will stream to them regardless of exceptionally bad service.

They will never come right with the current Racist,arrogant, ignorant attitude that they have to their customers and the public in general.

If they privatize the company will only go the same route as Telkom, where all the BBBEEE partners will jump ship as soon a possible the government will still want to steer the ship and it will Plummet and crash with qualified person in the cockpit.

I urge all and sundry to boycott this Abomination they call S.A.A

I thought we were told earlier that the SAA fleet was too old to compete (puke) and that more modern aircraft were a necessity. Had to get rid of the junker B737-800's and get those better perfoming Airbus planes. lol. Now I have heard that the operating financials were so bad that the money will be used to keep operating and that is the reason the Minister refuse to release the financial statements last week with the Board subsequently resigning. Either way, it's like Mr. Mbeki said, "SAA is vital to the government and we will underwrite their losses, no matter how great".

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However working for SAA as a Pilot is still awesome...I don't think you will find a better working environment and overall , a happy bunch of Pilots.

Yeah, that's because they work less and get paid more, with more paid for benefits, compared to any other airline in SA, not to mention worldwide. Nice. But also uncompetitive. Great example they're setting for the rest of the company too, really spurs everyone to new heights of efficiency - Keep it up boys! :E

Let's see now.

I run a loss making business employing friends and family in high positions, not based on any competence to do the job, but purely because of who they are.

My business has been losing money for years but a generous benefactor keeps supplying more money so that I can employ more incompetent people as the losses increase.

I need new equipment and I appoint a friend to go to the suppliers who will give him the biggest kickback which he will of course split with the rest of us. The suitability for purpose of the equipment supplied under this contract is not questioned. Nor is the fact that the equipment I already have does not need replacing.

My losses increase and the benefactor coughs up more money. Ad infinitum.

Disclaimer : Any similarity with any airline or political party in sub-Saharan Africa or anywhere else is purely coincidental.

quote from M & G

:ugh:
"I said, let's postpone the AGM until the government certification committee meet and finalises the guaranteed. It met on Thursday last week. We didn't know what conditions they would come up with. We may need to engage about it ahead of the AGM. I said let's postpone the AGM till October 15 so we could study it. The company had run out of money completely."

Comair Limited, South Africa’s leading aviation company listed on the Johannesburg Stock Exchange, is challenging the application of the latest R5 billion government guarantee for SAA, says Comair CEO, Erik Venter.

In 1992, on deregulation of the domestic airline industry, the government developed an Aviation Transport Policy that was intended to govern the behaviour and funding of SAA in a competitive domestic environment. This included the provisions that SAA was not allowed to cross subsidise domestic with international operations, and that it could not receive government funding or guarantees as long as private competitors were required to rely on commercial funding.

“We understand that SAA has to rely on its shareholder to the extent that it is required to deliver a public service, in this case servicing routes that are not commercially viable for private airlines. However this does not apply in the domestic market or even on many routes into Africa where South African based airlines are attempting to compete against SAA. The losses incurred by SAA and Mango in the domestic market could not be sustained by a private airline, and have been incurred to protect SAA’s market share at the expense of its competitors and the taxpayer. We do not see any controls in place that will prevent this from happening again,” says Venter.

The only way to achieve a level playing field in the domestic market would be to separate SAA’s domestic operations, including Mango and SA Express, into an independent legal entity with its own leadership and transparent financial reporting. The domestic operation would then have to operate on sound commercial principles and without any government support or indirect cross subsidy from SAA international.

“The aviation industry is capital intensive and it is, therefore, necessary for airlines to behave in such a way as to make adequate profits and cash flow for reinvestment in aircraft. SAA's latest request for government funding for new planes is largely a result of SAA and Mango fighting their domestic competitors for market share at the expense of generating sufficient profits for sustainability,” says Venter.

Venter explains, “SAA, at least in the domestic market, is not like Transnet, in that there is a tax paying, private industry willing to fulfill the Southern African air transport requirements. However, if the government fails to ensure the achievement of a level playing field, then we might return to a state monopoly for domestic air travel, which is exactly what the Aviation Transport Policy was designed to avoid.”

As a matter of industry survival, and maintaining competition in the market for domestic air travel, Comair has an obligation to challenge further government support that will benefit SAA’s domestic operation. SAA's accumulated losses of R17-billion since deregulation, and the failure of nine of the 11 private airlines that have attempted to compete with SAA over the same period, is a clear indication of the impact of SAA’s assurance of state support.

"and that it [SAA] could not receive government funding or guarantees as long as private competitors were required to rely on commercial funding."

A case for a State bail-out of 1Time too?

Bailout or not, I reckon this is the end for SAA:eek:Think that nice cushy pilot job is coming to an end!

As long as SA has a government, or what passes for one, SAA will exist for their mutual benefit.

What used to be a great airline in the years leading up to 1994 has become a state-sponsored (ie tax payer funded) platform for incompetent managers who are owed political favours by the ANC. A black comedy one might say.

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What is causing SAA's turbulence?

The reasons for the sudden departure of the chairperson of SAA, Cheryl Carolus, and leading members of the board are still not clear.
But their resignations take place against a background of a troubled global aviation industry and the need for a R5-billion injection, despite a plan for a more orderly exit by board members. Their choice to leave at short notice has done little to restore confidence in the national carrier, given the appointment of a new chairperson, Vuyisile Kona, who is not entirely free of controversy.
No wrongdoing was found on the part of Kona or his counterparts, but he headed the board of trustees at Trilinear Empowerment Trust at a time when hundreds of millions of rands in clothing workers' pension money, ultimately under Trilinear's care, vanished. The saga was covered in detail in the Mail & Guardian.
Public Enterprises Minister Malusi Gigaba's spokesperson, Mayihlome Tshwete, said the ministry was satisfied that Kona was not implicated in these matters and had the skills and technical expertise to provide strategic leadership to SAA.
Kona worked for SAA before and he sued the airline after he was reportedly fired under former chief executive Khaya Ngqula.

Kona did not respond to questions regarding this incident or his time at Trilinear, but the Times reported that the dispute had been settled.
The timing of resignations, a cloud of allegations from the board about a lack of state support and the ministry's counter accusations about the failure to deliver on a long-term strategy for the airline indicate trouble at the top. A more orderly exit had been planned because a number of board members were not standing for reappointment. Instead, Gigaba was prematurely forced to reveal his replacements, which the Cabinet had approved on September 19.
One of the new board's tasks is to finalise a major aircraft order before year-end to replace its inefficient long-haul aeroplanes.
On October 2 the treasury announced it would provide a guarantee for a loan facility for SAA of up to R5-billion. The guarantee is on condition that the new board develops a turnaround strategy, which Gigaba and Finance Minister Pravin Gordhan must approve.
According to the public enterprises department, the guarantee's conditions also include providing a financing strategy for its planned purchase of both a short- and a long-haul fleet. It will also require the establishment of a technical committee comprising officials from the treasury and the department, which will be tasked with monitoring SAA's financial position and the implementation of the turnaround strategy.
The R5-billion granted to SAA brings the total of guarantees extended to state-owned enterprises and development finance institutions to R475-billion.
Conditions for airlines everywhere have soured, particularly because of rising fuel costs. According to the International Air Transport Association, jet fuel prices rose to $127 a barrel in June, adding an anticipated $208-billion to the industry's fuel bill.
Aggressive competition
Linden Birns, managing director of aviation consultancy Plane Talking, said fuel costs, especially in African countries, aggressive competition from Gulf carriers, rising user charges and the mandate on the state-owned company to service less populous and profitable routes were among the contributors to a tough trading year for SAA.
High jet fuel prices have been seen in a number of African capitals, said Birns. Many of these are destinations for the national carrier. For example, Angola charges a 200% premium on average jet fuel prices.
User charges such as airport taxes and overflight fees – the price airlines pay to fly across a country's airspace – were also on the rise, he said.
Birns said there was added pressure on SAA to increase productivity and better use its equipment, but to achieve this more cost- and fuel-efficient aeroplanes were needed.
Significant technological advancements in fuel and technical efficiencies over recent years have rendered aircraft bought in the past decade, which SAA has done, outdated and costly.
Unlike many international airlines, SAA has been unable to reduce its staff complement to manage cost pressures because it is a state-owned enterprise. International competitors have been turning to their shareholders to recapitalise and SAA is not unique in this regard.
It is circumstances such as these that are believed to be contributors to the loss SAA is expected to report at its annual general meeting in mid-October.
Unfair advantage
The decision to grant the airline finance was immediately challenged. Democratic Alliance spokesperson on public enterprises Natasha Michael said it "perpetuates the unfair advantage afforded to the national carrier at the expense of private airlines".
Private airlines have consistently cried foul over what the industry sees as the subsidisation of SAA's loss-making domestic services, whereas competitors have been left to sink.
Comair chief executive Erik Venter told Sapa that the airline's latest request for funding for new aeroplanes was a result of SAA and its budget airline, Mango, fighting domestic competitors for market share at the expense of generating sufficient profits for sustainability.
SAA was not like other parastatals such as Transnet, said Venter, because there was a "tax-paying private industry willing to fulfil the Southern African air transport requirements".
The minister has also castigated the board for its failure to provide a long-term strategic vision for the airline, although the former board members clearly see this differently.
The airline gave a presentation on its turnaround strategy to Parliament in May. It said:

It was expanding its routes into Africa;
It had dealt with a slew of competition suits dating back to 2000 and had set about curbing costs other than fuel, aiming for R1-billion in reductions for 2012-13;
It overhauled its sponsorship programme, the questionable management of which was a contributing factor in the termination of Ngqula's term as chief executive; and
It was in the process of replacing its fleet of short-haul carriers with more fuel-efficient aeroplanes. It was here that SAA indicated it expected to finalise a major order to replace its inefficient long-haul aircraft.

This is an indication that the company had a sound management team and effective board.
There has been speculation that Gigaba was getting rid of those members former minister Barbara Hogan had appointed, seeking to fill the board with people aligned to his interventionist take on the management of state-owned enterprises.
Tshwete called this "nonsense", saying that their terms were due for review and the minister wanted people with technical capabilities in aviation at the helm.
The new board would have to prove that it could deliver, said Tshwete, and it would be assessed on its performance.

R17 000 000 000's worth of houses

Does anybody have the means to truthfully, work out how many low cost economic houses could be comleted with 17 thousand million Rand in the last 8 years?
I'm sure the current government, who is not operating under sanctions, needs to rather feather the lives of what, 12 500 people working at SAA?
Non of us have an issue (apart from it being a stupid joke!) with there needing to be a national carrier. Why?? However, they really should only be allowed to fly to the destinations outside of Africa and region, with only longhaul aircraft to "show the flag" (Vital!!), where private enterprise will not be stood on.
We have plenty of good private enterprise within SA to successfully service the domestic and greater Africa region without the poor taxpayer paying for a carrier on which they likely (most) will never even travel on!:ok:

IINM, SAA was latched firmly to the taxpayer tit before '94 as well. The only difference back then was that the airline was govt owned and controlled via SAR, and no bones were made about it. No idea of the details, but it's possible that they did try to work within their budget back then, unlike the current mob who feel they have a direct line into the pockets of Joe Sixpack whenever they overshoot the mark through unsound business practice and reckless splashing about of money they don't generate.

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IINM, SAA was latched firmly to the taxpayer tit before '94 as well

It was, but it was not making such massive losses due to nepotism, and the people in senior positions mostly had some semblance of industry experience. Most of the recent incumbents were not appointed on that basis.

SAA money woes ‘worse than feared’, says report

Eisch!!!! The way it is written, it seems only SAA has rising fuel costs to worry about and no one else in this world. Such a poor excuse!

SOUTH African Airways (SAA) is in a far more serious financial position than previously thought and it is clear the airline will need much more than the R5bn lifeline it recently and controversially secured from the government.
A "transition plan" the former board of directors of SAA drew up, and which Business Day has seen, shows that the airline will report a loss of R1.25bn for the past financial year. It reveals the crippling weakness of the airline’s balance sheet — its liabilities exceed its assets by 359%.
The tabling of the carrier’s annual financial statements was postponed last month when Public Enterprises Minister Malusi Gigaba was forced to play for time to secure the lifeline from the Treasury and avoid SAA’s auditors from flagging its status as a going concern.
The guarantee allows the airline to continue borrowing should it need to in an environment of high fuel prices.
The Department of Public Enterprises has conceded that more money will be needed from the Treasury to support the carrier. Therefore, Mr Gigaba had sought to strengthen the board through a skills mix that would take the airline forward. The new board members have skills in aviation, mergers and acquisitions, and financial management, according to the department.
Conditional to the R5bn guarantee is that the board oversee the drawing up of a long-term business plan in co-operation with technocrats from the department, the Treasury and SAA.
"The shift by the minister has been to entrench a more technocratic board at the helm of SAA as it going through this very tough time," department spokesman Mayihlome Tshwete said last week.
"Whatever strategies are presented must be guided by technical pragmatism because that will strengthen the minister’s hand in engaging with Treasury (for more money) and with the public, when communicating the strategy and plans for the airline."
The department was not expecting a speedy turnaround. "It won’t be overnight, there are variables which are out of SAA’s control, such as fuel prices and the economic downturn," Mr Tshwete said.
"It is difficult to say (when SAA will be profitable), it is going to be a process, but we have a shareholder that is committed to this process."
The transition plan talks about the failure of the 2009 programme of cost cuts, and restructuring to allow the airline to rebuild its balance sheet from retained earnings.
"SAA’s balance sheet was weak in 2009 and the carrier’s financial position has continued to atrophy despite a range of operational improvements," it said.
"SAA remains inadequately capitalised with a current debt-to-equity ratio of -359%. As a result, the group cannot adequately support the growth strategy at the centre of the 2012-15 corporate plan, or navigate cyclical adverse trading conditions."
This weakness undermines the airline’s ability to fund the acquisition of new, more fuel-efficient aircraft or to cater for the government’s ambition that it expand its route network.
By comparison, Singapore Airlines’ debt-to-equity is 8%, Ethiopian Airlines is at 54%, Lufthansa 75%, Kenya Airways 122%, and Air New Zealand at 226%.
Since 2006, SAA has been surrendering market share to its aggressive and better capitalised competitors, including Emirates Airlines, Ethiopian Airlines, Kenya Airways and Egypt Air.
The board has proposed that R2bn be invested on the fleet, which would allow SAA to improve its service offering.
The fleet renewal "will support a 10-year international network plan which aims to expand the east-west corridor, connect major global flows to Africa via Johannesburg, and fly nonstop on all international routes."
Over the next five years, SAA is expecting to take delivery of 20 Airbus A320s for domestic flights. To achieve its goals, SAA would need to lease six new A350 aircraft as soon as possible, and be able to take delivery of the aircraft between 2016 and 2018.
It is also envisioned that there would be some sort integration of SAA, SA Express and SA Airlink. This could take the form of a straightforward merger or placing them into a single holding company, allowing for cost savings on shared services.
SAA, according to the plan, "must be run on commercial lines borrowing on the strength of its balance sheet", the board said. "This requires an adequate capital base and from time to time capital injections that enable the carrier to realise its broader developmental objectives as defined by the shareholder, allowing the company to borrow for fleet expansion."
The rapid expansion of SAA’s international service since 1994 had not been matched "by a commensurate increase in the level of capitalisation", the board said.
Rising fuel costs have had an enormous impact on SAA’s bottom line. Fuel costs have increased from 24% of SAA’s total expenses in 2009-10 to 34% in 2011-12 and rose by R2.2bn last year to R8.3bn.
SAA declined to comment on the loss the company made in the past financial year.
"The actual position in relation to the company’s financials will only be known once the AGM (annual general meeting) has taken place (on October 15)," SAA spokesman Tlali Tlali said. "To provide any details regarding the financials before … would undermine the reason(s) why we have it in the first place."