SAA transfer to Treasury's ambit has already begun

The transfer of administrative powers was gazetted on Friday though it took effect retrospectively from December 12. The cabinet decided on the transfer because of the precarious financial position in which the airline finds itself.

The finance ministry said in a statement on Monday that Mr Nene and the SAA board (including the acting CEO Nico Bezuidenhout and the airline's chief financial officer Wold Meyer) had agreed that to stabilise SAA's financial position‚ elements of the long-term strategy must be implemented "with speed" even though the board was still engaged in refining and updating it.

"In addition‚ short-term and medium-term milestones have been identified and will form part of the shareholder compact that the minister of finance will sign with the board‚" the statement said.

The ministry and the Treasury are working with SAA on the measures required to enable the airline to finalise its annual financial statements for the 2013-14 financial year and hold its annual general meeting within the 15-month period stipulated by the Companies Act. SAA has not been able to finalise its financial statements on a going concern basis without some kind of financial assistance or guarantee by the government.

The ministry's statement said the SAA annual general meeting was expected to be held early in February and‚ after it was concluded‚ Mr Nene‚ SAA chairwoman Dudu Myeni and the airline's management would brief the media.

"National Treasury is familiar with SAA and what is required to stabilise the airline's financial position through the department's involvement in overseeing the guarantees that have previously been provided to the company‚" the statement said.

Mr Bezuidenhout took over as acting CEO following the suspension of Monwabisi Kalawe who is contesting his suspension with the Commission for Conciliation‚ Mediation and Arbitration (CCMA).

Mr Bezuidenhout has embarked on a 90-day action plan to return SAA to its long-term turnaround strategy which has been in existence for some time but which has not been properly implemented. If the 90 days ending on March 24 next year produces the envisaged results‚ Treasury will consider granting SAA a government guarantee to secure funding.

The plan aims to stem losses and make savings of R1.3bn a year by inter alia cancelling or reconfiguring loss-making routes such as those to Hong Kong‚ Mumbai and Beijing and by renegotiating contracts with its suppliers. The sale of an equity stake in SAA as well as the disposal of some of its assets are under consideration to raise cash.

Source: BDpro