File Image/ANA
File Image/ANA

The clean- up of SOES continue with SAA

By Kabelo Khumalo Time of article published Aug 2, 2018

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JOHANNESBURG - The clean- up of state-owned entities heated up yesterday after the government decided to toss back the restructuring of troubled airline SAA to the Department of Public Enterprises, placing it firmly under Public Enterprises Minister Pravin Gordhan's total control.

The department and National Treasury said yesterday that Gordhan was best placed to be the custodian of all of the state's aviation assets.

“The transfer follows a study commissioned by National Treasury and the Department of Public Enterprises to develop the optimal group structure for the state-owned aviation assets,” a joint statement stated.

“The recommendations from this study, if considered appropriate, may require implementing changes to the group structure of SAA.”

Gordhan has gone about restructuring state entities since his appointment in February, with former Transnet, Denel and Eskom boards making way for new ones.

Gordhan also shook up the management of SA Express yesterday, roping-in former SAA chief executive Siza Mzimela in an acting capacity against protestations from unions.

The Civil Aviation Authority suspended SA Express's air operator's certificates and its certificates of airworthiness in May, but later gave the carrier the green light to take to the skies again.

The state’s aviation assets also include SAA’s subsidiaries Mango and SA Express.

Last month, SAA said it was ramping-up its turnaround plans, with Emirates, Turkish Airways, Qatar Airways, Kenya Airways, Air Mauritius, United Airlines and Singapore Airlines as potential partners.

SAA said the discussions centred on commercial agreements such as interline, code share, cargo as well as possibilities of the airlines taking some of its excess flight deck and cabin crew staff.

Deputy Finance Minister Mondli Gungubele in April told legislators that the national carrier would require an additional R12billion in bailouts over the next three years.

This included a bailout in the 2018/19 financial year of R5bn, while another R5bn would be needed in 2019/2020, and a further R2bn in 2020/21.

SAA chief executive Vuyani Jarana, in a letter to trade union Solidarity last month, said the airline would “immediately” start looking for a strategic equity partner.

Ian Cruickshanks, chief economist at the Institute of Race Relations, said the transfer of SAA back to the Public Enterprises Department would not be a silver bullet.

“It does not matter what department SAA reports to as long as it maintains the same operating model, it will not yield the desired results.

"The fact it now reports to the department does not mean it will find it easier to attract the required capital,” Cruickshanks said.

Meanwhile, the Railway Safety Regulator said yesterday that the Passenger Rail Agency of SA (Prasa) was operating trains without a valid safety permit.

The revelation saw the United National Transport Union threaten legal action against Prasa if its members were forced to work in unsafe conditions.

“It's mind-blowing how the government could have allowed this crucial state asset, the cheapest transport for the poorest of the poor, to fall apart like this,” said Stebe Harris, the union's general secretary.

Prasa could not be reached for comment.


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