Kulula bemoans SAA government bailouts

By Time of article published Jul 17, 2008

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Government funding of SA Airways should stop, Comair-owned airline Kulula said on Thursday.

"Kulula has once again called on government to call it a day and keep its promise...that South African taxpayers will stop filling the begging bowl for ailing state-owned businesses," said Kulula in a statement issued by its parent company Comair.

"The South African airline industry is well serviced by private local airlines and efficient international airline businesses that need to make profits in order to survive."

The airline said many other companies like Flitestar, SunAir and Nationwide had failed because they could not compete with state-funded SAA.

"State re-nationalisation of the industry will continue to be destructive to free and fair competition."

The company said it was "bizarre" that the proceeds of its income tax, fuel taxes, VAT, import duties and other government levies then were paid over to a state-owner competitor.

Kulula said other African countries like Malawi, Uganda and Botswana had discontinued state funding of their national airlines.

On Thursday, the Democratic Alliance said a private public partnership might help SAA improve its running. Spokesman Manie van Dyk said a private equity player could take a part-shareholding in SAA.

"The airline's reliance on the public coffers will be eased. Once SAA has reached sound profitability levels and the air travel environment has improved, the best option may be to sell it on to the private sector."

Van Dyk said SAA had apparently asked for R3 billion from the National Treasury this financial year to offset losses sustained in the last financial year.

"The pretext for the last capital injection was that SAA had too much personnel.

"Today we are told that SAA is running at a loss because of the rising cost of fuel. For how long is this going to be an excuse?"

On Wednesday SAA said it owed improved results for the year to end March 2008 to its restructuring programme.

"The first year of restructuring was largely financial in nature, and was completed three percent above target, which was a significant achievement," SAA CEO Khaya Ngqula said.

"More than R1-billion in costs have been taken out of the organisation, and there has also been a positive impact on revenue as a result of restructuring."

The airline reported a significant turnaround to post a R123-million net profit (excluding restructuring costs) from ongoing operations, against a loss of R883-million the previous year.

The airlines energy bill rose R951-million to R6,68-billion and made up almost 30 percent of total operating costs in the review period, the airline said at the time.

Comment could not be immediately obtained from SAA on Thursday. - Sapa

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