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The Airbus leasing agreement has been a cause for concern amongst ordinary South Africans as many believe it was part of the reason Finance Minister Nhlahla Nene was sacked by President Jacob Zuma. The introduction of a middle man, and renegotiation of the deal, by chairperson Dudu Myeni was seen as a money-making racket that would have required more taxpayer funds, Nene refused. Following his reappointment, new Finance Minister Pravin Gordhan said all deals that Nene signed off on would stay as is, for now, but he was going to meet with Myeni at some point. In his speech he spoke about the importance of SAA to the country but he also said time was running out for those using SOE’s as money-making toys. Wonder how that applies to Myeni? A deal will most likely go ahead one way or another, with taxpayers once again flogging a dead horse, after the leaked memo highlighted the company’s insolvency was being run by a reckless board.While Russell Loubser, former SAA board member, says the result of this malevolent incompetence will force taxpayers to keep pumping in billions of rand annually. No updates have been released from Treasury on SAA but Airbus says its willing to proceed with the initial leasing agreement but the deadline is December 21, Monday next week. One must also question the Airbus decision, given the airlines insolvency concerns. It looks like it’s going to be a long weekend for National Treasury and SAA. There is also an in-depth timeline showing the partnership between SAA and Airbus going back to 2002, interesting stuff. – Stuart Lowman
By John Bowker and Andrea Rothman
(Bloomberg) — Airbus Group SE is willing to proceed with a government-approved deal to lease five A330 wide-body planes to South African Airways, even after the state-owned carrier’s chairwoman sought to renegotiate the deal in defiance of the country’s National Treasury, according to a person familiar with the situation.
SAA would need to send a legally-binding letter of agreement signed by both the airline and the Treasury by a Dec. 21 deadline to secure the lease arrangement, said the person, who asked not to be identified as the matter is private. That would remove the possibility that payments related to an earlier deal to buy 10 A320 planes from Airbus would be due from SAA, threatening the financial stability of the unprofitable carrier.
“There is no planned announcement on this matter at this stage,” SAA spokesman Tlali Tlali said by text message on Thursday. “Should there be any significant or material change, we will advise accordingly.”
The Treasury will comment next week, spokesman Phumza Macanda said by e-mail. Airbus didn’t respond to phone calls seeking comment.
A legal opinion from SAA’s internal legal counsel to the board, which the High Court in Johannesburg on Thursday ruled was entitled to be made public, advised the board to secure an equity injection from the state or apply for business rescue, Johannesburg-based Business Day newspaper reported Friday, citing the memo. The airline earlier obtained an interim interdict against Media24, Moneyweb and BDFM Publishers, seeking to prevent the publications from publishing the memo.
The opinion from SAA’s internal legal counsel, Ursula Fikelepi, warned that to continue trading under current circumstances was “reckless,” and recommended the board abandon attempts to renegotiate the leasing of the five A330 aircraft and revert to an old deal structure that was negotiated in March.
SAA, which has been cutting costs to ease a dependence on government-guaranteed loans, agreed to the A330 leasing arrangement earlier this year in a move that was forecast to save about 1.4 billion rand ($93 million). The deal was approved by then Finance Minister Nhlanhla Nene, but thrown into doubt by SAA Chairwoman Dudu Myeni, who wanted the planes sold to a third party in South Africawhich would then lease them to the airline.
Nene ordered SAA to proceed with the leasing arrangement on Dec. 3, but was fired six days later by President Jacob Zuma — whose personal foundation is run by Myeni. Nene’s eventual replacement Pravin Gordhan said Dec. 14 that Nene’s decision stood and he would talk to Myeni about the deal this week.
SAA last month appointed Musa Zwane as its seventh acting or permanent chief executive officer in less than four years. Other changes amid the uncertainty about the Airbus deal include the departure last month of Chief Financial Officer Wolf Meyer.
TIMELINE: The controversial SAA-Airbus deal
Cape Town – The R6bn Airbus aircraft deal has continuously been placed under the microscope. Here’s a timeline of the controversial deal.
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