Airbus finally gets SAA documents for Nene’s deal

DECEMBER 24, 2015

Airbus confirmed that South African Airways (SAA) on Wednesday morning supplied it with the required legal documents for the lease of five A330-300 aircraft, as per its instructions by Finance Minister Pravin Gordhan, as well as his predecessor Nhlanhla Nene.

Airbus received the required legal documents to conclude the deal, its spokesperson Linden Birns told Eyewitness News on Wednesday.

This was officially two days after the deadline set by Airbus in order for SAA to avoid paying the R603m that formed part of the old deal.

However, after Treasury received confirmation from SAA on Monday evening that it had started acting on the directive set by Gordhan, Airbus told Treasury it would extend the deadline to the following Monday, December 28.

“What was required was a change to the 2002 contract and it had to be supported by a legal opinion and Treasury’s go-ahead as well, and now it’s just a matter of signing everything off,” said Birns.

In 2002, SAA entered into a purchase agreement with Airbus to acquire A320 aircraft, which proved financially onerous to the airline.

In April 2015, the board of SAA applied for approval from the former Finance Minister Nhlanhla Nene to cancel the purchase of ten A320 aircraft from Airbus and, instead, enter into an operating lease on five A330-300 aircraft with Airbus. During July 2015, Nene approved this request.

During November 2015, SAA applied for permission to amend the transaction to allow SAA to purchase the A330-300 aircraft and enter into a sale and lease back deal with a local lessor/s.

“SAA argued that one of the benefits of this transaction structure would be a mitigation of the airline’s exposure to exchange rate fluctuations,” said Treasury.

On 3 December 2015, Nene rejected the amendment to the A320/A330 swap transaction structure and ordered SAA to send Airbus the required documents, a process it had stalled – until now. The process was fraught with tension and drama, with Nene allegedly falling out with President Jacob Zuma’s close friend Dudu Myeni – the SAA chairperson.

On December 9, Zuma removed Nene as finance minister without first giving any reasons. He later said he wanted to nominate Nene for a role in the new Brics Bank, a reason many analysts rejected, because it is far less important than his role as Finance minister.

Gordhan’s reappointment as Finance minister has soothed markets after the initial dramatic plummet and he quickly showed his renewed strength by sticking to Nene’s rejection of SAA’s seemingly flawed proposal.