WHY SAA MUST GO

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WHY SAA MUST GO

Unread post by expatdoc » Wed Nov 28, 2018 12:27 pm

This SAA parrot is dead - pushing up daisies - analyst exposes ongoing farce - BizNews.com


CAPE TOWN - Even the best run companies seldom bounce back when billions are continually poured into them in a so-called bail-out. The longer it goes on, the more the financiers are likely to ask why the band-aid-turned-bandage, turned life-support, isn't working.
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Re: WHY SAA MUST GO

Unread post by HJK 414 » Wed Nov 28, 2018 12:34 pm

Well,

You can not shoot down someone that states a case as clearly as this ........ [-X


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Re: WHY SAA MUST GO

Unread post by Jack Welles » Wed Nov 28, 2018 1:42 pm

Unfortunately he has (deliberately?) ignored national fiscal realities in what can only be described as a (Free Market Foundation style) rant.

His background is also hardly reassuring.
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Re: WHY SAA MUST GO

Unread post by expatdoc » Wed Nov 28, 2018 2:22 pm

THESE BOIKIES, ON THE OTHER HAND, NOW THEY DESERVE TO FLY! =D>

Comair reports record earnings despite soaring fuel costs


Comair Limited (JSE: COM) today (SUBS: Tuesday 18 September 2018) announced record earnings despite dismal trading conditions that include poor GDP growth, rising fuel prices and a domestic airline market characterised by surplus capacity.
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Re: WHY SAA MUST GO

Unread post by HJK 414 » Wed Nov 28, 2018 3:08 pm

Jack Welles wrote:
Wed Nov 28, 2018 1:42 pm
Unfortunately he has (deliberately?) ignored national fiscal realities in what can only be described as a (Free Market Foundation style) rant.

His background is also hardly reassuring.

Eddie,

If you are inferring that the fiscal status / debt to GDP ratio - of RSA is such that the write off (or converting to bonds) of the total debt would be inconvenient ...... How will that improve ? The fiscal position of RSA is in a downward slide - and the amount of "high level " taxpayers is dwindling as the economy contracts. To me it seems that we are looking at an increasing problem that will not go away by ignoring it - nor by pumping endless money into it - just to avoid having to deal with the issue ....


south-africa-government-debt-to-gdp.png

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Re: WHY SAA MUST GO

Unread post by expatdoc » Wed Nov 28, 2018 3:14 pm

LEADERSHIP...SAA, NO, THE WHOLE OF ZA, CAN DO WITH SOME PROPER LEADERSHIP. SALUTE!

Comair - Leadership Team - Comair Limited - Leadership Team - Comair


At the head of our board of directors is chairman Piet van Hoven and Erik Venter, leads our Executive Managment team, as CEO.
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Re: WHY SAA MUST GO

Unread post by Jack Welles » Wed Nov 28, 2018 3:55 pm

HJK 414 wrote:
Wed Nov 28, 2018 3:08 pm
Jack Welles wrote:
Wed Nov 28, 2018 1:42 pm
Unfortunately he has (deliberately?) ignored national fiscal realities in what can only be described as a (Free Market Foundation style) rant.
His background is also hardly reassuring.
If you are inferring that the fiscal status / debt to GDP ratio - of RSA is such that the write off (or converting to bonds) of the total debt would be inconvenient ...... How will that improve ? The fiscal position of RSA is in a downward slide - and the amount of "high level " taxpayers is dwindling as the economy contracts. To me it seems that we are looking at an increasing problem that will not go away by ignoring it - nor by pumping endless money into it - just to avoid having to deal with the issue ....JK
Basically AIUI the SEO debts (and some other govt debt) are linked, pay up one in full and the others have to be met immediately. So that's not just the govt debt that appears in your chart (I think!) but all the guarantees that have been issued, as well. There's a lot more of those.

Now the plan (not much of one I'm the first to admit :( ) is that you kick the can down the road because that only costs you R5 billion of your
R1 Trillion budget per year and, big and, hell, they may even get it sorted so that SAA can be profitable like Comair :wink: :wink: :wink:
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Re: WHY SAA MUST GO

Unread post by expatdoc » Wed Nov 28, 2018 4:04 pm

CONTINUING TO POUR MONEY DOWN THE BLACK HOLE THAT IS SAA, WILL JUST HASTEN ZA's ECONOMIC DEMISE.

(RUN FORREST RUN, THERE'S A TZUNAMI COMING...)

Zuma's rule has savaged the NDP


NEWS ANALYSIS With the steady drip feed of #Gupta Leaks it's easy to forget the governance and development issues that South Africa should be prioritising. South Africans are at war - with shadowy foreign forces, with each other - and we've all become war correspondents, taking refuge in nihilism and gallows humour while our economy shrinks and our treasures are stolen.
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Re: WHY SAA MUST GO

Unread post by Jack Welles » Wed Nov 28, 2018 4:15 pm

Seems a little dramatic, obviously there's a plethora of opinions out there, which is fair enough in and of itself.

Anyway it's only +-R5 billion while the budget's R1 trillion. Hell, free varsity eductation is going to cost R50 billion ...
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Re: WHY SAA MUST GO

Unread post by V5 - LEO » Wed Nov 28, 2018 4:30 pm

Jack Welles wrote:
Wed Nov 28, 2018 4:15 pm
......... Hell, free varsity eductation is going to cost R50 billion ...
....that should go in any case as there is no way in SA that there will be work for all those graduates - that in itself presents the fact that there would not be enough taxes raised to keep the notion going but I am drifting - I say give the new CEO some time to proof himself and his plans, but keep it to a schedule, no performance / change - next lady for a shave!!
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Re: WHY SAA MUST GO

Unread post by Jack Welles » Wed Nov 28, 2018 7:27 pm

V5 - LEO wrote:
Wed Nov 28, 2018 4:30 pm
Jack Welles wrote:
Wed Nov 28, 2018 4:15 pm
......... Hell, free varsity eductation is going to cost R50 billion ...
....that should go in any case as there is no way in SA that there will be work for all those graduates - that in itself presents the fact that there would not be enough taxes raised to keep the notion going but I am drifting - I say give the new CEO some time to proof himself and his plans, but keep it to a schedule, no performance / change - next lady for a shave!!
Ek stem saam - let's see what happens with the new CEO - I'm Africa cynical, but still - ons moet maar wag en dan sien ons ...

It might be the cold Windhoeks that my wife has been forcing down my throat this afternoon but right now I'm feeling downright optimistic 8)

As an aside, when did they start making the bottles that small? [-X
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Re: WHY SAA MUST GO

Unread post by Jack Welles » Thu Nov 29, 2018 9:01 am

An added thought - most probably know this but from some of the comments there may a few that don't know how this works.

When SAA needs another R5 billion, Treasury doesn't whip out their wheelbarrow, load it with 5 billion R1 coins and zip it across to the SAA head office. In fact, the govt doesn't (usually) pay out any money at all. Not one cent. What often happens is that SAA/Treasury line up a lender (Bank/bonds/whatever) and the govt provides the lender with a guarantee.

So from a cashflow point of view the transaction is neutral. So if SAA didn't need the R5 billion it wouldn't have been spent on schools/roads/whatever, as some have suggested, because the money doesn't actually exist as hard cash as far as Treasury is concerned.

Another point: R1 trillion = 1 000 x R1 billion. This means that even if Treasury did kick in R5 billion in cash it would represent +- 0,5% of the annual budget.

Perhaps someone should check my calcs because I'm not really a numbers person but I think that's right when I say that that represents one half of 1% of SA's annual budget. Which really isn't much in the bigger scheme of things.

And a final point: shouting (as in using caps) doesn't somehow miraculously make an argument more cogent.
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Re: WHY SAA MUST GO

Unread post by evanb » Thu Nov 29, 2018 9:16 am

Jack Welles wrote:
Thu Nov 29, 2018 9:01 am
When SAA needs another R5 billion, Treasury doesn't whip out their wheelbarrow, load it with 5 billion R1 coins and zip it across to the SAA head office. In fact, the govt doesn't (usually) pay out any money at all. Not one cent. What often happens is that SAA/Treasury line up a lender (Bank/bonds/whatever) and the govt provides the lender with a guarantee.
Yes and no. Historically that is what used to happen. Treasury would send a letter with a guarantee and SAA would line up a fixed term loan in line with the time limitation of the guarantee, historically Citibank, Standard Chartered or Nedbank were the favorites. However, given SAA cash flow's problems and declining business prospects the banks have declined to provide loans against those guarantees and Treasury have had to transfer cash, both last year and this year, so that SAA could pay off maturing loans funded by expiring guarantees.
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Re: WHY SAA MUST GO

Unread post by Jack Welles » Thu Nov 29, 2018 9:34 am

Fair enough - being a lawyer that's why I said "usually" (covering my bets :D ) - and who knows what's going to happen down the pike, the point being that with a new look administration under Slick Cyril potential lenders may have a change of heart.

In any event, do you agree with the rest of what I wrote? Ie, it's only one half of one percent of the annual budget and, in an earlier post, that if they have to suddenly meet all the existing guarantees for one SOE many are interlinked and the govt would have to kick in on many, if not all, the others even though they would not have reached their maturation dates? (Caveat: depending on the terms of the various contracts)

Basically it's a relatively cheap way (0,5% of the annual budget) of kicking the can down the road and with the power of prayer ( :D - I'm an agnostic :lol: ) maybe the damn SOE's will come right.

The important point being that it's "little picture vs big picture" situation ... IOW, it an't that simple as "shut it down" ...

Late Addition: Govt borrows money every year to help balance the budget - can't see why lenders should refuse to accept govt guarantees (perhaps the terms are not as acceptable?) when they are prepared to lend to govt? maybe it has something to do with the terms govt can get on, say bonds, while the terms on, say, an "overdraft" for SAA would be less attractive? There has to be some rationale for these moves? I suppose an additional point is that it's still borrowed money whether direct to SAA or via govt bonds etc.
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Re: WHY SAA MUST GO

Unread post by HJK 414 » Thu Nov 29, 2018 10:21 am

Eddie,

I have tried to find a connection between SOE's / state funding and guarantees by Government - but that is a difficult one.
From what I have read - and seem to have digested - the Guarantees and financing of SAA has nothing to do with the other SOE's / their financing or guarantees in place for those entities.

It seems that the financiers / banks - had a finance arrangement / contract with the entity SAA.
The Government / Treasury co-signed the loan - as a guarantor.
That means no real "debt" - but simply an obligation if and when SAA were to default.
Also no real issue on the Fiscal side / budget for the Government (money has not been spent).

Whenever SAA were short of Cash - the Government would send the money to SAA - and the Airline would fulfill it's contractual obligation to the bank (otherwise a default would have been the case) / In many other cases - the financing would roll over - or be increased in volume and only another signature would suffice from the Governments side.

Therefore - If the Government were to step in - ask the banks to convert the outstanding loans from SAA to p.e. Government bonds - the airline would be debt free overnight - and be able to find an equity partner / a financier / a limited IPO - or whatever - and go on it's way. In my view the banks would jump at the opportunity. That would have no effect for Treasury towards any other SOE - as there is no link between the finance agreements of SAA and those entities. The airline is the sole contract partner and if the Banks are prepared to "invest" in Government Bonds - that is their decision.

If that were to happen - SAA would end up as a stand alone business - with approx. 5 Billion Rand in assets - and simply having an operational cash issue. (projected loss about 7 Billion (of which around 2.5 Billion in interest payments) / so they would require around 4 Billion or so to be able to keep flying for the time being). They have almost no assets left (no depreciation / cash reserve) so they would run out of operational cash in a very short time.

Yet it would open the door for partners / interested parties to partake in trying to keep the airline flying / without the burden of the current financing arrangements.


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