State will give more cash to ailing SAA

Comment on this story
IOL pic feb7 saa plane generic Independent Newspapers A South African Airways plane prepares to land at OR Tambo International Airport near Johannesburg. File picture: Simphiwe Mbokazi

Johannesburg - The government wants to throw more money into the bottomless pit of SAA as it feels the airline has made notable progress in implementing its turnaround strategy.

The National Treasury and the Department of Public Enterprises are in discussions about making a more substantial financial intervention for SAA.

A recapitalisation package, whose amount has yet to be confirmed by the National Treasury, is expected to be substantially bigger than the “piecemeal” guarantees that the national airline has been receiving from the government in the past 10 years.

“You can’t have both arguments. If we want to migrate SAA to financial sustainability, we need to give it necessary support. If we continue giving it piecemeal, we will continue to have the recurring problem we’ve had for the past 10 years,” said Public Enterprises Minister Malusi Gigaba’s spokesman Mayihlome Tshwete.

The exact figure that SAA will receive will be announced “in due course” when the Treasury has made its decision.

The R5 billion guarantee that the government gave SAA in 2012 has been extended from two years to “long term”.

But Parliament’s portfolio committee on public enterprises, which visited the SAA board and executive management yesterday to assess progress made in the implementation of the turnaround strategy, was not happy.

“The members were not happy because you’d remember that the strategy was submitted to the minister in April last year. So it’s been so many months and they feel that not much has been done,” committee chairman Peter Maluleke said.

He said because the committee members would like to see the implementation accelerate, they had now agreed that there should be a checklist and time frames for each milestone of the implementation process.

But Tshwete said the fact that SAA had made cost savings of R1bn in the past year attested to the commitment of the strategy having an impact within a year.

“We all need to acknowledge that it is a South African asset and, therefore, the state needs to support it.

“People who politicise SAA deliberately ignore certain facts, facts like it is the lowest capitalised airline in the world. We are not having an honest discussion about SAA.”.

Tshwete would not reveal how much the airline needed to plug the gap in its balance sheet and procure the fuel-efficient fleet that SAA’s latest long-term turnaround strategy talks about.

When SAA management briefed Parliament last year about its new long-term turnaround strategy, the airline also said that it would only know the extent of its funding requirement when it had reviewed its route network.

The 20-year strategy was submitted to Gigaba in April last year. It was the 10th such strategy in 13 years.

The other nine had never been fully implemented as the national airline abandoned them as soon as the situations that prompted their adoption stabilised.

SAA announced during its financial presentation last week that it had to withdraw its procurement tender for the 23 new fuel-efficient wide-bodied aircraft it planned to have delivered from this year because the contract did not contain industrialisation and localisation elements as required for state tenders. - Business Report



sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.