While president Cyril Ramaphosa has announced R290 billion in new investment, state companies continue to be a black hole into which government is throwing billions of rands.
Finance minister Tito Mboweni this week announced yet another round of bailouts for failing state companies, including another R5 billion for South African Airways, and R1.2 billion for SA Express.
However, according to insiders, speaking to the City Press, things at the latter group are worse than ever, with the company losing R1 million a day leasing aircraft that are too unsafe to fly.
According to the report, SA Express spent R150 million leasing 21 planes over five months, of which R80 million went to 13 planes that have not flown at all in that space of time, and will probably never fly again because they are “scrap”.
In May, the Civil Aviation Authority grounded SA Express’ entire fleet after a safety audit uncovered severe cases of noncompliance which posed serious safety risks to its passengers.
The City Press calculated that R50 million was spent in June and July to lease the 21 aircraft which were grounded for those two months.
After clearance was given to two, then eight aircraft, the airline was still ploughing R40 million a month into the remaining “scrap” fleet, the paper said.
A source at the airline, quoted by the City Press, said that the group leased all its planes, but could not use them because they are scrap, could not repair them because there is no money, and could not return them because they are not in the condition they were leased in.
As such, the R1.2 billion bailout from government will help, but is not enough by a long shot.
“SA Express will carry on running at a loss and the debt will get bigger and bigger. The debt on its balance sheet is about R2 billion. Even if government paid that tomorrow, it will still need to recapitalise the business,” they said.
You can read the full report in the City Press for 28 October