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SAA: This chicken is cooked and should not be reheated

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Ghaleb Cachalia is an MP in the National Assembly and the DA spokesperson on Public Enterprises. He serves on the Ethics Committee in Parliament.

When will it dawn on government that SAA is bankrupt and no ‘creative’ solution to resurrect another state-owned airline from the ashes of this state-owned folly is likely to succeed?

The era of Covid-19 has produced some strange pronouncements, ranging from the banning of cooked chicken to the apparent resolution of a beef about the fate of South African Airways (SAA).

Minister Nkosazana Dlamini-Zuma’s gazetting of the prohibition on the sale of cooked chicken apart, the National Transport Movement trade union (NTM) – which in late 2018 was reportedly in financial distress and had not paid the South African Revenue Service (SARS) and its employees’ provident fund for months – has now announced it is in talks with the government to a establish a new airline to replace SAA.

According to the NTM, this was discussed at the latest meeting between unions and Public Enterprises Minister Pravin Gordhan, following an increasingly desperate search for an alternative plan to recreate the folly of SAA as a “national asset which is internationally competitive, viable, sustainable and profitable”.

Part of the dreams which inform this folly is an airline that will be a “shining torch to a new world post-Covid-19 in which SAA is a key catalyst for investment and job creation” – the mind boggles and jaws drop at the temerity of the assertion.

Notwithstanding that the Parliamentary Portfolio Committee on Public Enterprises has not met for over a month despite repeated requests from the Democratic Alliance (DA) for it to convene and exercise oversight on these and other matters, the minister and the unions are now apparently embarking on a flight of fancy, blind to the folly of former forays that have led to bankruptcy and liquidation.

Even the much-touted “maverick” (but really, dyed-in-the-wool ANC) Finance Minister Tito Mboweni has pledged support to create a new national asset “out of the ashes of SAA”, in a post-Covid-19 environment. This remarkable confidence in the ability of an almost failed state to resurrect a national airline flies in the face of global experience.

While any sensible individual would welcome any opportunity that arises out of liquidation to save the brand and rescue necessary jobs, it is patently evident that this will need to be in the absence of the dead hand of the state. New independent partnerships including key existing stakeholders and new ones will have to be assessed on their merits and their unencumbered contribution to an airline that will operate in a changed and challenged post-Covid-19 environment. For starters, regulations that constrain foreign investment to 25% will need to be scrapped.

And this will have to happen while the global aviation industry is in turmoil. For the proponents’ elucidation, Virgin has fired more than 3,000 people, including 600 pilots, Finnair returned 12 planes and laid off 2,400 people and low-cost operators like YOU have grounded 22 planes and fired 4,100 people while RyanAir grounded 113 planes and fired 900 pilots with 450 more in the coming months. Etihad has cancelled 18 orders for A350, grounded 10 A380 and 10 Boeing 787 aircraft while laying off 720 staff. Emirates has grounded 38 A380s and cancelled all orders for the Boeing 777x. They have “invited” all employees over 56 to retire. 

The long list of global airlines in dire straits among hitherto profitable companies is much longer than space permits.

Still, the dunce of the class, the sole shareholder in SAA, the company that has absorbed some R57-billion in bailouts since 1994 on the road to bankruptcy, is now engaging in talks to resurrect a phoenix from the ashes of SAA in a post-Covid-19 environment.

When will it dawn on a government obsessed with state assets whose voluminous bailouts have been the ruin of our economy, that SAA is bankrupt and no “creative” solution to resurrect another state-owned airline from the ashes of this state-owned folly is likely to succeed.

Even its wholly-owned subsidiary, Mango – often touted as a success story – is not a going concern. It cannot afford to pay salaries and its debts exceed assets. When former CEO Nico Bezuidenhout left, the company had R600-million in its account, but forced and unnecessary purchases from SAA and failures to honour service level agreements with Lufthansa, among other factors, has resulted in the cessation of salary payments. Management, however, populated by ANC deployees in the main, are still rewarded with 50% of their salaries which, incidentally, is more than a captain earns on full salary.

What, one has to ask, is Gordhan thinking, or perhaps smoking? Is it perhaps the cannabis plant that Mboweni publicly tweeted that’s growing in his garden? 

What is clear is that, in the absence of any fiscal space to fight the pandemic or indeed fund the state’s portion of the R500-billion stimulus, we cannot countenance any more state-sponsored disasters that have historically been the reason for the parlous state of the economy. DM

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