Change has to come at troubled SAA, says exasperated Tito Mboweni
JOHANNESBURG – Finance Minister Tito Mboweni on Wednesday all but washed his hands off struggling state-owned airline SAA, saying that the government was now betting on private equity partners to help turn its financial and operational problems around.
Mboweni said the national carrier incurred more than R28 billion in cumulative losses over the past 13 years, leaving it insolvent.
He said SAA was unlikely to ever generate sufficient cash flow to sustain its operations in its current configuration.
“We have essentially chosen to subsidise the middle class and wealthy flying around the country and other parts of the world, rather than the ordinary workers who sit in old trains from the townships every day, often getting stuck and being late for work,” Mboweni said. “We are also subsidising the wealthy bond holders, who hold government-guaranteed debt but receive higher yields without additional risk.”
Mboweni insisted that operational and governance interventions were urgently required to ease the pressure on the fiscus.
He said the government could be forced to honour its contractual obligation over the next three years and again bail out SAA as it was unable to repay outstanding government guaranteed debt of R9.2bn.
Mboweni said the government had issued R5.5bn worth of bailouts to SAA in the current year to enable the carrier to extend maturities on outstanding debt obligations, giving it time to develop an affordable repayment plan with creditors.
He said without a debt repayment plan supported by the government, the airline's lenders were unlikely to extend outstanding government guaranteed debt beyond the end of the fiscal year, or to provide additional facilities needed for SAA to remain liquid.
Earlier, during a media briefing, Mboweni said the Treasury was in talks with the Department of Public Enterprises about which of the troubled SOEs should be in public hands.
Mboweni suggested that SAA’s subsidiaries would not escape scrutiny when the government moves to dispose some of its assets weighing heavily on the fiscus.
“(Director-general) Dondo (Mogajane) and myself have made agreements that we are going to sell some assets, but we are not going to tell you which ones, but we will sell some assets. When you are in difficult times, when the glove doesn't fit you don’t wear it. When the company is in trouble, you rebalance your portfolio, nothing ideological,” he said.
“SAA has about 3 percentage shareholding in SA Airlink. The most amazing arrangement you can ever find in the Republic. This is the SAA that owns shareholding in Airlink and owns SA Express, but these two companies in which you have interest, compete with each other. It's an unbelievable situation. Maybe the time has come for us to consider selling, or closing some of these assets, which may be an interesting case study,” he said.