jnev3289 wrote:No words...
I spent hours trying to better express the stupidity of this bail out right after another bail out..
You win.
Moderators: richierich, ua900, PanAm_DC10, hOMSaR
jnev3289 wrote:No words...
mercure1 wrote:I wonder why SA even bothers with the farce that SAA is a quasi-private enterprise? They should simply nationalize it completely and call it a day.
Nothing shameful with having state owned airlines.
LAXintl wrote:Personally, in my book, there indeed is no shame in being a fully government-owned airline - that is quite normal globally and where the airline can serve for broader national benefit, but it seems to me this messy middle state SAA finds itself hardly ideal.
LAXintl wrote:SAA is indeed a fully government owned, however like other long list SOEs (State-Owned Enterprises) in South Africa it operates largely as a typicall commercial enterprise retaining its own legal and financial structure and is tasked to participate in normal commercial activities with government being the primary shareholder.
So yes the airline was nationalized in the ownership sense, but it still (maybe not very effectively) is more a typical commercial enterprise hence why we keep hearing about its financial travails and boardroom drama.
Personally, in my book, there indeed is no shame in being a fully government-owned airline - that is quite normal globally and where the airline can serve for broader national benefit, but it seems to me this messy middle state SAA finds itself hardly ideal.
TerminalD wrote:LAXintl wrote:Personally, in my book, there indeed is no shame in being a fully government-owned airline - that is quite normal globally and where the airline can serve for broader national benefit, but it seems to me this messy middle state SAA finds itself hardly ideal.
Which is why the MidEast brouhaha is a joke. Over half of the world's ASMs are on fully or partially State owned airlines. Ironically, the largest country with fully government owned airports is the US of A.
readytotaxi wrote:Hands up who wants to join their FF programe
LAXintl wrote:The National Treasury transferred another R3 billion from the National Revenue Fund to the airline to help it repay part of a loan from Citibank, due today.
At the same time, Treasury Director General Dondo Mogajane said the money is not a loan, but a recapitalisation. SAA won’t have to repay any of the R10 billion it will receive in guarantees and cash from government coffers this year.
http://ewn.co.za/2017/09/30/bailout-giv ... e-treasury
LAXintl wrote:The National Treasury transferred another R3 billion from the National Revenue Fund to the airline to help it repay part of a loan from Citibank, due today.
At the same time, Treasury Director General Dondo Mogajane said the money is not a loan, but a recapitalisation. SAA won’t have to repay any of the R10 billion it will receive in guarantees and cash from government coffers this year.
http://ewn.co.za/2017/09/30/bailout-giv ... e-treasury
evanb wrote:
Indeed, nearly every commercial airport in the US is state-owned, often by local authorities. They also receive FAA grants for infrastructure (a subsidy). The funny thing in South Africa is that while SAA is in shambles the major commercial airports are owned by a state-owned company (Airports Company South Africa) that does very, very well without any government assistance. They even have management contracts for foreign airports (Sao Paulo-Guarulhos, Mumbai and Accra).
kitplane01 wrote:evanb wrote:
Indeed, nearly every commercial airport in the US is state-owned, often by local authorities. They also receive FAA grants for infrastructure (a subsidy). The funny thing in South Africa is that while SAA is in shambles the major commercial airports are owned by a state-owned company (Airports Company South Africa) that does very, very well without any government assistance. They even have management contracts for foreign airports (Sao Paulo-Guarulhos, Mumbai and Accra).
Speaking only of the South African airports ... they have a natural monopoly. If you want to fly to J'burg, you realistically need to use their airport. Therefore they can charge whatever fee they need to cover their costs, regardless of how good or bad their cost structure is.
That the Airports Company South Africa makes a profit says little about their cost structure.
The airline, on the other hand, operates on a competitive marketplace that causes airlines with a high cost structure to take a loss. Very different thing.
evanb wrote:kitplane01 wrote:evanb wrote:
Indeed, nearly every commercial airport in the US is state-owned, often by local authorities. They also receive FAA grants for infrastructure (a subsidy). The funny thing in South Africa is that while SAA is in shambles the major commercial airports are owned by a state-owned company (Airports Company South Africa) that does very, very well without any government assistance. They even have management contracts for foreign airports (Sao Paulo-Guarulhos, Mumbai and Accra).
Speaking only of the South African airports ... they have a natural monopoly. If you want to fly to J'burg, you realistically need to use their airport. Therefore they can charge whatever fee they need to cover their costs, regardless of how good or bad their cost structure is.
That the Airports Company South Africa makes a profit says little about their cost structure.
The airline, on the other hand, operates on a competitive marketplace that causes airlines with a high cost structure to take a loss. Very different thing.
Most airports in the world bar a few examples are natural monopolies, even in cities/places with multiple airports they are often owned by the same operator (e.g. New York, Chicago, Paris, Sao Paulo, Istanbul, Milan, Washington). ACSA cannot charge whatever they want since their fees are regulated and the regulator has regularly denied them the fee increases that they ask for. Further to this, ACSA's fees are highly competitive when compared to many other airports and they have not received infrastructure subsidies from government.
kitplane01 wrote:I'm glad their regulated.
But that they are owned by the government, and the government sets their prices, and they make a profit, does not mean they have a good cost structure. Maybe they do, but this is not evidence.
When you say "fees are highly competitive when compared to other airports" do you mean Nigeria or the Netherlands or Namibia?
I would not want to consider Nigeria my benchmark because of their reputation for ineptitude. I would not want to consider the Netherlands my benchmark because of labor costs. Maybe Namibia? It's not obvious. South Africa is kind of a unique country.
kitplane01 wrote:I would not want to consider Nigeria my benchmark because of their reputation for ineptitude. I would not want to consider the Netherlands my benchmark because of labor costs. Maybe Namibia? It's not obvious. South Africa is kind of a unique country.
evanb wrote:kitplane01 wrote:I'm glad their regulated.
But that they are owned by the government, and the government sets their prices, and they make a profit, does not mean they have a good cost structure. Maybe they do, but this is not evidence.
When you say "fees are highly competitive when compared to other airports" do you mean Nigeria or the Netherlands or Namibia?
I would not want to consider Nigeria my benchmark because of their reputation for ineptitude. I would not want to consider the Netherlands my benchmark because of labor costs. Maybe Namibia? It's not obvious. South Africa is kind of a unique country.
The regulation model requires them to present cost data as well as international comparison as well as feedback from stakeholders. Courts have oversight of it. There is a brief description of it on the web: http://www.airports.co.za/business/economic-regulation
Since fees are differentiated between domestic, regional (only Botswana, Namibia, Lesotho and Swaziland) and international, one can make direct comparisons and don't need to make ridiculous comparisons to Nigeria and Netherlands. A few years back, around 2010, there were complaints that ACSA put its fees up steeply in response to the boom in capital spending for the 2010 World Cup since they did not receive any funding from the government for new terminals in Johannesburg, Cape Town and the new airport in Durban.
You keep bringing up cost structure as if you know its bad and arguing that it does not have a good cost structure, but it's a red herring since you are playing an assumption that the cost structure is bad because they're a profitable monopoly. You're advancing a narrative on assumption rather than data. Firstly, a disproportionately large number of airports are natural monopolies, secondly, there are competitive options in some cases in South Africa (e.g. Lanseria and Wonderboom for Johannesburg, Margate and Pietermaritzburg for Durban). The IATA Aviation Charges Intelligence Center data shows ACSA to be quite competitive (data is proprietary, so can't post it).
parapente wrote:The trouble with gov't bailout's is there is a tendency (whatever country) for corporations to just carry on expecting the inevitable next bailout further down the line.
I would emagine that SA has enough business to create a workable business model.But if they can't/won't you just have to be prepared to let them go/sell it.If you don't they 'know' another bailout will be given.
Sadly the state the SA govt is in at the moment it is the latter that will probably happen and the taxpayer will pay.
Perhaps Italy is a good example of how not to do it.
scotron11 wrote:parapente wrote:The trouble with gov't bailout's is there is a tendency (whatever country) for corporations to just carry on expecting the inevitable next bailout further down the line.
I would emagine that SA has enough business to create a workable business model.But if they can't/won't you just have to be prepared to let them go/sell it.If you don't they 'know' another bailout will be given.
Sadly the state the SA govt is in at the moment it is the latter that will probably happen and the taxpayer will pay.
Perhaps Italy is a good example of how not to do it.
AFAIK there is no regulatary body that polices these so called handouts. And reading some recent newspaper articles the current leadership at SAA leaves a lot to be desired. Some of their decisions would make a great comedy!
kitplane01 wrote:Why do they charge different rates for a plane coming from with South Africa, from Namibia, and from the UK? It would seem that rates different from costs, since these planes would have the same costs (not including immigration. But even Namibia and the UK both have to go through immigration, so those should be the same costs.)
mercure1 wrote:Will this saga never end?
SAA will always have some sort of loan or debt to pay off, which seemingly the government must now cover.
enzo011 wrote:There seems to be some movement today. It looks like Dudu Myeni is out as chairperson of the board, then again she shouldn't have been there since there is a time limit, or supposed to be, but she wanted to stay in place until Jacob Zuma left his post in 2019. Whether this will change anything is up in the air, but at least one of the problems that the banks and lenders were campaigning against is out.
SAA chair Dudu Myeni out
South African Airways (SAA) welcomes the announcement of a capital injection made by government for the airline today. The injection will go a long way to stabilise the airline financially and will help restore the confidence of all stakeholders in the operational sustainability of the company.
LAXintl wrote:SAA says thank you for the recent R10 billion (USD $709 million), but the airline still remains undercapitalized and in need of another R9 billion still.
SAA REMAINS UNDER-CAPITALISED, DESPITE BAILOUT
http://ewn.co.za/2017/11/21/south-afric ... te-bailout
https://www.cnbcafrica.com/news/souther ... e-bailout/
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LAXintl wrote:SAA says thank you for the recent R10 billion (USD $709 million), but the airline still remains undercapitalized and in need of another R9 billion still.
mercure1 wrote:South African Airways stated in Parliamentary Commission testimony that the airlines capital needs continue with an estimated projected deficit of US$641 million over the next 12 months even with a recent government injection of US$709 million.
piedmontf284000 wrote:In the meantime, SA needs to park their entire A340 fleet, drop all long haul routes except LHR and focus on flying regionallywithin the bottom half of Africa.
evanb wrote:piedmontf284000 wrote:In the meantime, SA needs to park their entire A340 fleet, drop all long haul routes except LHR and focus on flying regionallywithin the bottom half of Africa.
Parking the A340s will do nothing to fix the governance problems. Also, why keep LHR, it's one of the worst performing long-haul routes for them?
piedmontf284000 wrote:evanb wrote:piedmontf284000 wrote:In the meantime, SA needs to park their entire A340 fleet, drop all long haul routes except LHR and focus on flying regionallywithin the bottom half of Africa.
Parking the A340s will do nothing to fix the governance problems. Also, why keep LHR, it's one of the worst performing long-haul routes for them?
Because you can't park the entire fleet, so you might as well park the one's that cost the most to operate. Yes, it will do nothing to fix the governance issues, but they have to start somewhere...anywhere... to reduce costs. They can't keep doing the status quo. As for LHR, the majority of South Africa's global distribution lies in Europe. The flight to LHR is an important one if for none other then their financial ties to London and the fact it is the financial center of Europe.
andrefranca wrote:Poor SA, as a Brazilian I feel we`re sharing the same drowning boat....
Jawaiiansky66 wrote:andrefranca wrote:Poor SA, as a Brazilian I feel we`re sharing the same drowning boat....
Everything is cyclical - SA and Brasil will rise again....just keep working hard for a better world. Don't give up.
I had the chance to fly SAA in 2015 and I was impressed! the food was good, the service spot on and the planes nicely furnished. it is a good product if all works out. Good luck SAA
kitplane01 wrote:Cyclic? Really?? I was under the impression that SA has been doing a nose dive for a very long time, and shows no sign of ever pulling up. What evidence (beyond mere hope) do you see of SA ever turning around?
Government investing ... nope. Already been tried a thousand times.
New Management ... nope. SA has had so many new managers the office staff must be dizzy.
Change in market conditions ... nope. The South African economy and world airline travel next year will likely be just like last year.
piedmontf284000 wrote:evanb wrote:piedmontf284000 wrote:In the meantime, SA needs to park their entire A340 fleet, drop all long haul routes except LHR and focus on flying regionallywithin the bottom half of Africa.
Parking the A340s will do nothing to fix the governance problems. Also, why keep LHR, it's one of the worst performing long-haul routes for them?
Because you can't park the entire fleet, so you might as well park the one's that cost the most to operate. Yes, it will do nothing to fix the governance issues, but they have to start somewhere...anywhere... to reduce costs. They can't keep doing the status quo. As for LHR, the majority of South Africa's global distribution lies in Europe. The flight to LHR is an important one if for none other then their financial ties to London and the fact it is the financial center of Europe.