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SA Express needed Minister's help for debt payment plan

With four grounded aircraft‚ financial challenges and a big vacancy rate‚ South African Express is proving to be Public Enterprises Minister Lynne Brown’s “problem child“.

Updating the portfolio committee on Public Enterprises on the six state-owned entities in her department‚ Brown said that while SA Express was a “problem child“‚ she believed “we are close to finding a solution for it“.

She said the challenges at the company were “largely structural rather than operational“.

She said the airline faced profitability and liquidity problems and is unable to pay its debts.

Last month‚ the airline was expected to make a payment of R150 million to its lenders by February 24‚ “failing which its government guarantee would be triggered‚ requiring payment within 30 business days“.

Brown said they were only able to make payment of R58 million and her department had become involved to negotiate payment instalments with the banks.

Four SA Express planes are currently grounded due to maintenance issues‚ and the company was in urgent need of a new fleet.

Brown said a Public Finance and Management Act application for the funding had been received from SA Express. However‚ this had been declined.

The company forms part of the government’s plan to rationalise its airlines — SAA‚ Mango‚ SA Express and its 2.5% share in Airlink — in a bid to cut costs.

But Brown said‚ this was made more difficult by the fact that the only airline in the government stable with codeshare — an agreement that allows two airlines to work on the same route — was SAA.

She said the restructuring could potentially be done in two ways: either “as a holding company that holds all the companies together and determines routes‚ or as a merged company with 25% private participation“.

Brown also briefed the committee on the other state-owned entities in her department‚ Eskom‚ Transnet‚ Denel‚ Alexkor and Safcol.

Asked by IFP MP Narend Singh about her earlier comments that an enquiry be held into the State of Capture report which had highlighted state capture in Eskom‚ Brown said she “it remains my view that there should be an enquiry” to allow the report to be fully investigated.

“It is of course‚ the prerogative of the President‚” she said.

Brown also told DA MP Natasha Mazzone‚ who had asked why Eskom was still sponsoring New Age breakfasts and had‚ together with Transnet sponsored the Progressive Professionals Forum that she believed SOEs should not advertise.

“Personally I don’t think SOC’s need to advertise themselves and I have encouraged them to stop advertising‚” she said.

She‚ however‚ added that each entity sponsored numerous activities such as schools‚ and these were decided by each company’s internal sponsorship committee.

 

 

 

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