Cape Town – Government should get out of the commercial airline space and sell the loss-making South African Airways (SAA), according to Cape Chamber of Commerce and Industry president Janine Myburgh.
“SAA has become a black hole that is simply consuming the resources of the country, and it would be irresponsible to pour any more good money into the failing airline.”
In a confidential Cabinet memo distributed to members of the
SAA continues to make significant losses and the airline’s finances have deteriorated to such an extent that it cannot afford to pay suppliers. In addition, SAA needs to
In the Cabinet memo, Gigaba said the sale of non-core assets, such as government’s stake in Telkom, is the only viable option to
“The only thing that we can learn from this sorry story is that the government does not understand business and, for the sake of the country, it should get out of the commercial space. It simply does not have the management skill to compete in the market place,” Myburgh said.
She adds that SAA has had “more than enough” time to turn its fortunes around.
“We must remember that SAA’s main competitor, Comair, is doing well and making a profit in the same market. This tells us that SAA is badly managed and unable to compete, despite the resources that have been poured into it. SAA needs drastic surgery, not bailouts.”
In the Cabinet memo, Gigaba conceded that
SAA has a total of R19.114bn in government guarantees, of which R2.7bn is not
Revelations ‘hardened’ attitude of SAA lenders – Gigaba spokesperson
Meanwhile, BusinessLive quoted Gigaba’s spokesperson Mayihlome Tshwete as saying that the disclosure of the confidential Cabinet memo in Parliament on Wednesday added to the “precariousness” of SAA’s situation in that it “strengthened” the hand of SAA’s lenders who demand that the airline meet its debt obligations.
In the memo, Gigaba said SAA’s lenders initially agreed to extend the repayment of its loans to April 30, and then again to June
Tshwete reportedly claimed the lenders now know that funds would be forthcoming and would choose to take their money. “It has blown the negotiations.”
Alf Lees of the Democratic Alliance, who made the disclosure on Wednesday,
“SAA has been in trouble for over a decade and is now in very serious trouble due to the ANC government’s utter failure to turn it around. The bank’s lack of confidence in SAA and the South African government has nothing to do with the DA’s revelations in Parliament and everything to do with a complete lack of confidence, based on the very actions of the ANC government and their mismanagement of SAA’s finances.
“The Minister of Finance would do well to face up to this fact and to finally do what is needed – put SAA into business rescue and to find private equity investors,” Lees said.
Nehawu warns government
The National Education Health and Allied Workers’ Union (Nehawu) added its voice to the displeasure about the proposed SAA bailout, particularly in the event that the Public Investment Corporation (PIC) is roped in to provide funding to the ailing national carrier.
Fin24 earlier reported that SAA in its corporate plan listed the PIC as a source of funding of R6bn for the 2018 financial year.
The PIC administers among other things the Government Employees Pension Fund.
Nehawu warned government in a statement “not to mess with its loyal servants’ retirement funds”.
“As Nehawu we are prepared to
The union ascribed the financial crisis at SAA to a lack of leadership and political oversight.
“No bailout can save the SAA nor will any attempts to throw money at the crisis help alleviate the situation.”
Nehawu said the number of state funds and government guarantees granted to SAA did not resolve the cash crunch at the airline, which came about as a result of years of operational losses.
“The looting and
Nehawu also called on Gigaba to remove the entire SAA board.
“A new board with a new mandate is immediately needed to salvage the SAA.” DM