Paris – Airbus Group is willing to proceed with a government-approved deal to lease five A330 wide-body planes to South African Airways, even after the state-owned carrier’s chairwoman sought to renegotiate the deal in defiance of the country’s National Treasury, according to a person familiar with the situation.

SAA would need to send a legally-binding letter of agreement signed by both the airline and the Treasury by a Dec. 21 deadline to secure the lease arrangement, said the person, who asked not to be identified as the matter is private. That would remove the possibility that payments related to an earlier deal to buy 10 A320 planes from Airbus would be due from SAA, threatening the financial stability of the unprofitable carrier.

“There is no planned announcement on this matter at this stage,” SAA spokesman Tlali Tlali said by text message on Thursday. “Should there be any significant or material change, we will advise accordingly.”

The Treasury will comment next week, spokesman Phumza Macanda said by e-mail. Airbus didn’t respond to phone calls seeking comment.

Legal opinion

A legal opinion from SAA’s internal legal counsel to the board, which the High Court in Johannesburg on Thursday ruled was entitled to be made public, advised the board to secure an equity injection from the state or apply for business rescue, Johannesburg-based Business Day newspaper reported Friday, citing the memo. The airline earlier obtained an interim interdict against Media24, Moneyweb and BDFM Publishers, seeking to prevent the publications from publishing the memo.

The opinion from SAA’s internal legal counsel, Ursula Fikelepi, warned that to continue trading under current circumstances was “reckless,” and recommended the board abandon attempts to renegotiate the leasing of the five A330 aircraft and revert to an old deal structure that was negotiated in March.

SAA, which has been cutting costs to ease a dependence on government-guaranteed loans, agreed to the A330 leasing arrangement earlier this year in a move that was forecast to save about R1.4 billion ($93 million). The deal was approved by then Finance Minister Nhlanhla Nene, but thrown into doubt by SAA Chairwoman Dudu Myeni, who wanted the planes sold to a third party in South Africa which would then lease them to the airline.

Staff exodus

Nene ordered SAA to proceed with the leasing arrangement on December 3, but was fired six days later by President Jacob Zuma – whose personal foundation is run by Myeni. Nene’s eventual replacement Pravin Gordhan said December 14 that Nene’s decision stood and he would talk to Myeni about the deal this week.

SAA last month appointed Musa Zwane as its seventh acting or permanent chief executive officer in less than four years. Other changes amid the uncertainty about the Airbus deal include the departure last month of CFO Wolf Meyer.