SAA stopped from changing aircraft order

The government released a statement that said SAA proposal to acquire five A330-300s on sale/lease back agreements from a South African firm and denominated in South African Rand could land the carrier with debt, and recommending acquiring the aircraft straight from Airbus.

When the first ten aircraft of the twenty ordered in 2002 arrived, SAA incurred ZAR1 billion (USD69.9 million) in impairment losses.

The airline proceeded to negotiate with Airbus to convert remaining ten A320-200s on the order to A330s, which would be leased directly from the manufacturer.

SAA informed the Tresury in November that as well as altering the order, Airbus had agreed to defer the airlines obligation to pay outstanding PDPs until later this month.

"The information indicated that the proposed transaction structure would actually leave SAA in a materially worse off financial position where it is unable to meet its commitments as they fall due. Although possible benefits may be realised through allowing the airline to continue to pursue an alternative transaction, these were far outweighed by the high probability of a default on the government guarantees and the severe consequences thereof," said the Treasury.