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Thread: SAA to raid the treasury?

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    Site Caretaker Dave A's Avatar
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    SAA to raid the treasury?

    I see SAA is looking to government coffers to finance their big layoff.
    Members of Parliament on Wednesday heard a plea from the troubled state airline, South African Airways (SAA), for an injection of R744,4-million to pay for one-off labour restructuring costs. The cash, they were told, is needed before the last day of November.

    Parliament's finance portfolio committee heard an appeal from the airline to support Finance Minister Trevor Manuel's Adjustments Appropriation Bill which will allow the money to be paid over, even though it was not mentioned in his budget speech in February.

    SAA acting chief financial officer, Clive Else, told the committee that to restore the company to profitability -- to a bottom-line profit of 7,5% which he said is its peer group standard -- will take a minimum of a R2,7-billion improvement in its finances.

    Departmental initiatives, which include labour restructuring, will amount to R1,01-billion of this.
    full story from M&G here
    It must be nice to have a big money backer when you've stuffed it up.
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    I saw this on the news last night...again. I can't remember a time when SAA was not asking for money. So what can be done? Taxpayers put money down this big pit....what is the pay off supposed to be for the public? Surely the public must benefit from a public enterprise, else it should be disposed of.

    Am I wrong? Is there any reason why the government should keep funding SAA?
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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by dsd View Post
    Am I wrong? Is there any reason why the government should keep funding SAA?
    As the shareholder, I think they're a little low on options. But there are two questions on principle around the issue.

    One has to be Mango. Just how much money does SAA have tied up in their budget carrier? If I recall, there was an undertaking that government would not be funding Mango in fairness to existing budget flight operators. And it does not take big leap in logic to suggest that if SAA is short on funds due to its investment in Mango, and the government bales them out, the government is indirectly financing Mango.

    The other one is that government would be financing retrenchments, which I'd think is something of a political hot potato.

    Ultimately, I'm not surprised Trevor Manuel neglected to highlight the issue in his mini budget speech
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    I like this little extract from an article today:
    It has also reduced the number of management levels from seven to three as part of its goal of reducing management head count by 30%
    from M&G article here
    A lesson in there somewhere, I think.

    The other interesting bit is that the lay-offs may not need to be as drastic as originally anticipated. It seems now that the need is desperate, the unions have to come to the party in terms of labour costs.
    The trouble with opportunity is it normally comes dressed up as work.

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