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Democratic Alliance slams 'blackmail notice’ for bailout from SAA rescuers

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Democratic Alliance slams 'blackmail notice’ for bailout from SAA rescuers

11th September 2020

By: African News Agency

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South Africa’s main opposition Democratic Alliance (DA) on Friday slammed what it called an attempt by the business rescue practitioners at national carrier South African Airways (SAA) to blackmail taxpayers, through the government, into giving the struggling airline another bailout.

On Thursday rescue practitioners Les Matuson and Siviwe Dongwana said South African Airways’ financial situation was dire and they would not be able to continue trying to revive its fortunes unless the government made agreed short-term funding available by next week.

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Creditors in July approved a revival plan for the loss-making airline -- which has been under business rescue since last December -- which will see 2 700 employees retrenched.

Under the plan the government, which has already disbursed R16.4 billion to meet debt obligations the loss-making national carrier is unable to pay, must put up slightly more R10-billion in addition to pay for severance packages and help the airline resume operations.

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In July, Finance Minister Tito Mboweni clarified in court papers that the government had not committed to advancing the required funding but rather to "mobilising" to secure it, possibly from strategic equity partners.

On Friday DA legislator and member of Parliament’s standing committee on public accounts Alf Lees said the business rescue practitioners were attempting to “hold the proverbial knife to South African taxpayer’s throats” and this should not be accepted.

“The ANC (African National Congress) government is still under legal notice from the DA on the use of taxpayer funds to finance another SAA bailout,” he said in a statement.

“We will not hesitate to go back to court if the ministers of public enterprises and finance dare to cross this line.”

The latest notice by the rescuers only served to confirm that recent government claims that SAA was receiving unsolicited investment bids from private players were not serious and only designed to placate South African taxpayers, Lees added.

With a month to go before the announcement of the medium term budget policy statement by Mboweni, the country’s main opposition party would remain vigilant and ensure that South Africans were not ‘ambushed’ by a shock announcement for another SAA bailout, he said.

“StatsSA just announced the worst GDP contraction in SA’s history and the DA will oppose the ANC government’s predilection with financing their SAA vanity project at the expense of South Africans who have lost their jobs and seen their small businesses collapse during the Covid-19 period,” said Lees.

Statistics South Africa said on Tuesday gross domestic product plunged by a record 51 percent in the second quarter of 2020 as the economy took a pummelling from a  lockdown imposed by the government from March 27 to try and contain Covid-19. The restrictions have since been gradually eased.

On Thursday the SAA business rescuers said the funds available for operational expenditure were near depletion. They said they would inform affected parties on September 17 whether there had been any progress in negotiations about the funding.

Should there not be sufficient progress, a meeting of creditors would be held the next day on the way forward.

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