Heavily-indebted South African Airways (SAA) should be retained as a national airline but needs substantial restructuring, a top official in the governing African National Congress (ANC) party said.
SAA is running out of cash after government failed to provide R2 billion in emergency funding it promised when the airline entered a form of bankruptcy protection last month.
Government officials want to give SAA the promised funds, but Finance Minister Tito Mboweni is insisting the transfer be done in a way that avoids increasing the country’s budget deficit.
Time is running out for potential options including the sale of state assets.
“SAA should be retained as a national airline, which will require substantial restructuring. Cabinet should take the operational decisions needed to achieve this,” ANC Secretary General Ace Magashule told reporters.
Magashule, an ANC top six official, was among those who attended a four-day meeting of ANC leaders to debate the economy and struggling state firms.
SAA is among several South African state entities, including power company Eskom, mired in financial crisis after nearly a decade of mismanagement.
State companies’ financial problems are seen as one of the biggest threats to Africa’s most industrialised economy and helped push the country’s credit rating to the brink of junk status.
On Tuesday, SAA cancelled more than 20 domestic flights between its Johannesburg hub and Cape Town and Durban this week and 10 international flights to and from Munich, to save dwindling cash reserves.
The airline has not made a profit since 2011 and received more than R20 billion in bailouts over the last three years.
Last year government patience ran out.
Public Enterprises Minister Pravin Gordhan allowed SAA to enter “business rescue,” a bankruptcy protection process shielding the airline from creditors’ demands while an independent adviser takes over.
Since then, SAA burned through R2 billion in lender funds.
Mboweni told state broadcaster SABC in an interview at the World Economic Forum in Davos officials from his ministry were “working feverishly” to secure the extra R2 billion SAA urgently needs.
“It’s important that happens in a fiscally-neutral way because we don’t have an appropriations bill that can find an additional R2 billion. We will try to support SAA as much as we can.”