Johannesburg - South Africa's national airline SAA is a massive drain on the fiscus and should be closed down, albeit with careful thought and consideration for employees, think tank Free Market Foundation said on Thursday.

South African Airways needs R9.2 billion just to pay off loans and R15 billion to fund daily operations, and its local share of the domestic and international market has fallen from 95 percent in 1994 to 23 percent and 17 percent respectively, FMF director Temba Nolutshungu said.

"Some say a national carrier is needed to carry the brand of the country,"  he said.

"But is a failed airline, sucking billions in diverted resources from the poor and the taxpayers, really a brand to promote for national excellence and to carry our national pride? Simply, no."

Nolutshungu said while the potential loss of 10 100 jobs at SAA should not be taken lightly, the jobs came at a cost of R6.1 billion per year for the national carrier.

Free Market Foundation director Temba Nolutshungu. PHOTO: FMF

"SAA should pay loyal staff a very generous retrenchment package, more than is the norm, and spend money on training and development to create a true set of transferable skills for current employees," he said.

"It may seem extravagant, but a generous retrenchment package of 6 – 12 months would save South Africa billions over the next 3-5 years. The R15 billion SAA is demanding would more than cover this with much left over to wind down SAA in a responsible manner including the reskilling of all retrenched employees."

The FMF is a non-profit organisation, created in 1975 to promote free market practices which it says would help create a "non-racial, free and prosperous South Africa".

African News Agency/ANA