South African Airways is keen to recover some R1 billion ($59 million) in funds from a Zimbabwean legacy debt, but admits it has achieved only minimal success.
The carrier’s senior management appeared before a parliamentary public accounts committee on 22 October, laying out the need to source funding after a privatisation effort failed earlier this year.
SAA chief financial officer Lindsay Olitzki told the committee that the carrier had been holding “intense negotiations, back and forth” with the Zimbabwean government and reserve bank.
“We’ve looked at all the options, many options, in order to get those funds repatriated,” she says. “We’ve not been that successful.”
Olitzki says that, in May, the Zimbabwean side put forward a payment plan which involved retaining $9 million, enabling SAA to cover in-country costs without transfers from South Africa.
But she adds that the plan also indicated a repayment plan of $1 million per quarter for the remaining $50 million.
“That’s a very long payment plan,” she says, adding that the Zimbabwean authorities are “struggling with currency” and SAA has yet to receive the first instalment.
The debt was fully impaired in 2019, says Olitzki, but would be a “great bonus” for SAA if the funds can be recovered.
“But the [$50 million] is going to take a lot of time to be able to release, and we’re still waiting on the first payment,” she adds.
SAA chair Derek Hanekom told the committee that stabilisation of the airline has allowed it to approach banks more easily, and that the company has been “engaging” with banks with a view to obtaining a loan facility – not necessarily to be drawn, but to serve as a “buffer”.
“Cash reserves are low, which makes us quite vulnerable should there be any shock,” he says. “We don’t have anything to draw on.”
The Zimbabwean debt, he states, is “not a small amount of money”.
Hanekom indicated to the committee that SAA’s board is not keen on revisiting privatisation, but looking at alternatives to source the funding which would have been secured if a strategic partnership with a consortium, Takatso Aviation, had not fallen through.
He stresses that SAA is rebuilding its international network, and claims the carrier’s branding, fleet and experience give it an advantage.
SAA has introduced flights to destinations including Sao Paulo, Accra and Perth, and recorded strong increases in arrivals as a result, says Hanekom.
“We should recognise the value of a national airline,” he says. “From our point of view as a board, we don’t have any interest, desire or appetite for privatising this airline. Because we think this airline can be made into a very, very valuable asset to the South African economy.”
