Airbus demands US$727 million for cancelled South African order
Wednesday, September 10, 2008

Airbus is currently demanding US$727 million in pre-delivery payments
from South African Airways on an order for 15 A320s which the national
carrier claims it cancelled in 2004.

In 2002, former CEO Andre Viljoen made an order with Airbus for 15
A320s to be taken into delivery come 2011 and 2012. But when in 2004,
the airline lost a chunk of capital on currency derivatives, it
applied to Airbus to cancel the standing order.

Airbus acknowledged that it had received the letter, but no response
was given. SAA on the other hand, assumed the order was cancelled and
as such told government treasury, which then withdrew funding for the
program.

Fast-track four years down the path and Airbus this year approached
SAA with further pre-delivery payments of US$727 million.

An Airbus spokesperson adds to local news outlet Business Day, “We are
exploring various options with SAA which would enable it to acquire
Airbus aircraft which the airline may deem to be better suited to its
new business model.”

“We would not classify this as a dispute. This is the subject of an
ongoing negotiation which we hope to finalise soon,” they continue.

Currently South African Airways is undercapitalised, only recently in
their financial report citing that they had requested a loan from the
government of ZAR1.56 billion (US$197 million), following a loan of
ZAR1.3 billion (US$164 million) in 2007. The government also this
year gave the carrier ZAR653 million (US$82 million) to help with its
restructuring.