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Photo: Sunday Times
SOUTH African Airways (SAA) chairwoman Dudu Myeni has officially lost her battle to reconfigure the airline’s Airbus swap deal, which could have threatened the financial stability of SAA.
SAA has informed the Treasury that the board has approved the execution of the transaction as directed and a process is under way to conclude it within the next few days, the Treasury said in a statement late on Monday.
This took place after Finance Minister Pravin Gordhan directed the SAA board to conclude the swap transaction with Airbus in line with approval granted in July 2015.
Former minister Nhlanhla Nene fell out with Ms Myeni over the deal, with Mr Nene adamant that the deal continue as approved in July. He was fired by President Jacob Zuma — Ms Myeni's close friend — amid the turmoil.
After his appointment, Mr Gordhan gave SAA an opportunity to make further representation, following which he decided that the airline must go ahead with executing the A320/A330 swap as had been approved by Mr Nene, the Treasury said.
The Treasury has also been in direct contact with Airbus to ensure that all the required actions are executed smoothly to conclude the deal, it said on Monday.
"Airbus has indicated that they are amenable to the implementation of the transaction and have required that all legal documentation be in place by December 28," said the Treasury. "The National Treasury will work closely with Airbus and SAA to finalise the swap transaction."
The transaction will see SAA swap the purchase of ten A320 aircraft for a lease of five A330-300 aircraft from Airbus.
The implementation of the deal in this manner will mean that SAA will no longer be required to pay additional pre-delivery payments to Airbus, which would have amounted to about R603m.
"Also, as the airline takes delivery of each of the A330s, the pre-delivery payments that have already been paid, which total just more than $100m, will be refunded by Airbus.
"SAA will not be required to recognise impairments, as it will no longer be acquiring aircraft. It had been estimated that such impairments could have totalled in excess of R1bn."
"The implementation of the transaction will therefore improve the airline’s financial position by alleviating the cash flow pressure and improving its profitability. Further measures will be taken next year to stabilise the airline," Treasury said.
The Airbus deal was the first major test for Mr Gordhan since returning to Mr Treasury last week.