Gigaba should say how SAA will get funding at MTBPS
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JOHANNESBURG - Finance Minister Malusi Gigaba’s Medium Term Budget Policy Statement in two weeks time will shed light how the cash-strapped SAA will be funded to stay afloat.
This followed a dramatic twist yesterday when Telkom announced in the Johannesburg Stock Exchange that government would not sell its stake to fund SAA.
The government owns a 39% stake in Telkom and had hinted a few months ago it would dispose of the stake to pump money into SAA.
But Telkom said it was withdrawing its announcement it made in August, and that the stake would not be sold.
Gigaba will table his MTBPS on October 25 where he is expected to announce details on the funding of SAA.
The national carrier needs billions of rand to continue operating, but it is in serious financial trouble.
It has been struggling to pay its lenders and service providers.
The MTBPS by Gigaba would be awaited with bated breath on how the government would give it financial backing.
Currently, discussions are underway for the merger of SAA with Mango and South African Express to strengthen the balance sheet of SAA.
Deputy President Cyril Ramaphosa has been leading discussions on the matter since President Jacob Zuma made the announcement in his State of the Nation Address in 2015.
Despite billions of rand that the state has pumped into SAA in the last few years the airline was not out of trouble.
It has said in its financial reports in Parliament it was competing in a tough environment.
Recently, SAA cut some of its domestic routes in a cost-cutting drive.
In another cost-cutting measure the airline reduced its routes in Africa and other parts of the world.
But the mini budget by Gigaba would give the true state of affairs of SAA and how government would fund it.
It recently gave it R3 billion to pay one of the banks it owed.
It was owing Citibank and the bank had demanded its money when the loan matured at the end of last month.
More banks were lining up demanding their money from the airline, but National Treasury has managed to get the loans extended.
In June the National Treasury paid Standard Chartered Bank, bringing the total loans paid to the banks to R5.2bn.
Opposition parties have been up in arms about the bailouts given to SAA by the government.
Gigaba and his deputy Sifiso Buthelezi have insisted that SAA would not be privatised.
They would strengthen its governance and ensured it remained a viable State-Owned Entity.