This news broke just as Finance minister Tito Mboweni announced another round of bailouts for failing state companies, including another R5 billion for South African Aircraze ways, and R1.2 billion for SA Express.
The Sunday rag City Press reports “insiders” at SA Express has told them the company is losing R1 million a day because they are leasing aircraft that are too unsafe to fly.
BusinessTech quotes the City Press report as saying SA Express spent R150 million leasing 21 planes over five months. R80 million went to 13 planes that have not flown at all during this time. The insiders said these airplanes will in all probably never fly again. They are “scrap”.
Earlier this year, in May, the Civil Aviation Authority grounded SA Express’ entire fleet. At the time they said a safety audit uncovered severe cases of noncompliance, which posed serious safety risks to passengers.
The City Press calculated that R50 million was spent in June and July to lease the 21 aircraft, which were grounded for those two months.
After clearance was given to two, then eight aircraft, the airline was still ploughing R40 million a month into the remaining “scrap” fleet, the paper said.
Debt on its balance sheet about R2 billion
A source at the airline, quoted by the City Press, said that the group leased all its planes, but could not use them because they are scrap. They could also not repair them because there is no money, and could not return them because they are not in the condition they were leased in.
As such, the R1.2 billion bailout from government will help, but is not enough by a long shot.
“SA Express will carry on running at a loss and the debt will get bigger and bigger. The debt on its balance sheet is about R2 billion. Even if government paid that tomorrow, it will still need to recapitalise the business,” they said.