The information furnished to Minister Erwin on SAA, on which he was invited to comment, was more informative than his answer. The so-called "restructuring costs" of R653 million referred to by the Minister are regarded by other airlines as normal running expenses, factored into their budgets, and not an event requiring the injection of new capital. No private airline could have survived the losses suffered by SAA and paid by hapless taxpayers. 

The question asked the Minister to note that for the period from 2001-2007, SAA posted a cumulative net loss of R12.207 billion. When still under Transnet, SAA's hedge book led to the airline's technical insolvency, forcing the government to provide R7 billion in credit guarantees to cover derivative losses. Transnet was compelled to provide a further R6.1 billion to recapitalise SAA.  

The hedge book, which cost the airline R15 billion in just two years, was closed in June 2004. In 2005 SAA repaid Transnet R1.6 billion of the R4 billion compulsory convertible subordinated loan. Transnet agreed to convert the remaining balance of R2.4 billion of the loan to shares. In 2005/2006 financial year, SAA agreed to pay the South African Competition Commission R100 million over two years to settle various complaints, launched more than two years previously. Most recently, SAA was given R1.3 billion by government with promises of more in 2007, subject to its return to profitability. 

Erwin's response that government is not subsidising SAA but restructuring, is a form of politispeak that offers little comfort to taxpayers who have and will continue to fund a bottomless pit. There is scant comfort in the operating profit of R123 million considering the restructuring cost of R653 million on top of the massive accumulated losses posted thus far. 

As airline travellers, often treated as if we are doing SAA a favour by flying with the carrier and as taxpayers, we deserve a more creative solution than restructuring and generously bonusing a host of managers. 

We cannot expect to build up a competitive airline industry when the country's major airline receives such huge subsidization, masquerading under various guises such as  "funding of restructuring costs" while other airlines are compelled to subsidize it in the form of corporate taxes.

The question must be asked to what extent Mango is also being subsidized by Government?

For Further Information:
Dr Ruth Rabinowitz M.P(MB BCh)
011 802 1826 OR 082 579 3698