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5 things to know about the SAA deal

Thobeka Ngema|Published 9 years ago

Cape Town-151118- SAA chairperson Dudu Myeni during the presentation to Standing committee on Finance for SAA corprate strategy-Picture by BHEKI RADEBE Cape Town-151118- SAA chairperson Dudu Myeni during the presentation to Standing committee on Finance for SAA corprate strategy-Picture by BHEKI RADEBE

Five things to know about the SAA deal:

1. Finance Minister Pravin Gordhan instructed South African Airways to lease five (A330-300s) wide-body planes from Airbus Group SE. The deal must be fully signed and sealed by December 28, 2015.

2. According to the finance ministry, the deal means SAA will not have to pay additional pre-delivery payments to Airbus. It will also improve the airline's finances by alleviating cash-flow pressure and improving its profitability.

3. Prior to the Airbus deal going through, SAA chairwoman Dudu Myeni wanted ten A320 planes to be sold to a third party in the country who would in turn lease them to SAA.

4. The deal is set to assist SAA in cutting costs and limiting spending as they are dependent on state loans. They will also gain a $100 million refund for payments made for the A320s. They will alsoavoid a large sum of impairment charges.

5. It was former Finance Minister Nhlanhla Nene (recently fired by President Jacob Zuma) who came up with the idea of leasing five planes.

Source: Bloomberg

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