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Wednesday, November 14, 2018
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SAA must prepare for an equity partner – Public Enterprises Ministry

SAA equity partnerSouth Africa’s Ministry of Public Enterprises said struggling state-run South African Airways (SAA) should reduce its cost base and prepare for a strategic equity partner in the near future.

Finance Minister Tito Mboweni said last week SAA, which has not generated a profit since 2011 and survives on state guarantees, was unlikely to find a private sector equity partner and should be closed down.

The Public Enterprises ministry said the airline should stop all fraudulent contracts, address its cost base, discipline those implicated in corruption and prepare for an equity partner.

“The immediate priority for the Ministry of Public Enterprises is to stabilise SAA financially and through a rigorous process of cost reduction and commercial re-orientation,” the ministry said in a statement.

The ruling African National Congress (ANC) said there was no intention to shut down the airline.

“The focus now is on decisively tackling the challenges besetting the national carrier,” the ANC said in a statement.

In August, President Cyril Ramaphosa transferred oversight of SAA to the public enterprises ministry led by Pravin Gordhan from the finance ministry. Ramaphosa pledged to revive struggling state firms, including SAA.

Over the past decade, SAA lost its place as Africa’s biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers who have forked out more than 30 billion rand ($2 billion) since 2012 to keep it in the air.