South Africa's Gordhan Stands by SAA Airbus Plane-Lease Ruling

  • South African Airways must stick with plan to lease A330s
  • Ex-minister Nene fired five days after making SAA decision

South African Finance Minister Pravin Gordhan told the nation’s state-owned airline to proceed with leasing five Airbus Group SE wide-body jets and avoid triggering payments that could push the company to default.

Gordhan plans to talk to South African Airways Chairwoman Dudu Myeni by phone “in the next 24 hours” about the accord with the European manufacturer to lease A330 wide-body planes, which Myeni had sought to change, the newly appointed minister told reporters in Pretoria on Monday.

Former Finance Minister Nhlanhla Nene ordered SAA to implement the previously approved Airbus transaction on Dec. 3, five days before he was fired by President Jacob Zuma.

“The previous minister’s decisions stand until there is a necessity to change them,” Gordhan said. “SAA is an important flagship for our country, it’s a vital national asset that we need to protect.”

SAA, which is unprofitable and surviving off government-backed loans, renegotiated an order for 10 A320 aircraft in principle earlier this year in favor of leasing five more modern A330 models. That would have reduced operating costs and released the airline from pre-delivery payment obligations to Airbus, which would come due if an agreement between the carrier and manufacturer isn’t reached.

While Nene approved the swap in September, Myeni, a close associate of Zuma’s, last month outlined an alternative plan under which SAA would buy the A330 planes and enter into a rand-denominated sale and lease-back transaction with a local leasing company. After Nene was fired, the SAA board resolved to try and have his decision to reject the plan overturned, according to the Johannesburg-based Sunday Times.

Nene was replaced on Dec. 9 by little known lawmaker David van Rooyen, prompting a sell off of South African assets. Zuma abandoned his initial choice on Sunday, instead installing Gordhan -- who held the post between 2009 and 2014.

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