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Sell SAA or shut it down: Opposition urges the government to take action

South African Airways

Political opposition parties on Tuesday said government could not delay any longer on finding an equity partner for South African Airways, as members of Parliament (MPs) debated the latest crisis at the national carrier in the National Assembly. African Christian Democratic Party MP Steve Swart said it was time to cry halt after extending lifelines of a total R59 billion to the airline over a period of 23 years and urged Public Enterprises Minister Pravin Gordhan to pull the plug. Honourable minister, right now is the time for the hard decisions. We need to invite those equity partners before there is nothing left,” Swart said.

He said the wage increase settlement of 5.9 percent agreed last week at SAA smacked of irony because the company could not pay it unless it secured still more state funding. Passengers were left stranded earlier this month by a standoff between management and trade unions who demanded an eight percent wage increase, while Gordhan warned that even without a hike the company was not sure it could make salary payments.

“The irony is that they have been granted such an obscene increase by giving away other people’s money. Democratic Alliance MP Ghaleb Cachalia raised the heckles of African National Congress MP by describing the continued government support of the airline as a folly of socialist ego and national pride.

He said the government should sell it to Virgin boss Richard Branson “or anybody else who would have it”, alternatively it should be shuttered – which he warned came with a massive price tag in itself – or placed in business rescue.

The United Democratic Movement’s Nqayabomzi Kwanka said the airline, which last posted its annual financial results in 2017, was consuming money that should be spent building houses for poor grandmothers and rural schools and supplying running water to communities.

“The time has come to find a private equity partner,” he said, adding that the state must firstly ensure that it retains a controlling share and that secondly that the equity partner brings its own funding into the project.

South African Airways


Willie Madisha from the Congress of the People agreed that the state should retain a 51-percent stake and should deal with inevitable job cuts by seeing “to what extent attrition can work” and then getting involved in reskilling those people whose jobs cannot be saved.

Inkatha Freedom Party Mkhuleko Hlengwa said only a public-private partnership could make the SAA globally competitive, and argued that instead of the state spending billions on SAA, the airline should be bringing money into the economy to overcome the country’s challenges of poverty and unemployment.

Responding to the debate, Public Enterprises Deputy Minister Phumulo Masualle recalled the sentiment of national pride that swept the country following the Springboks winning the Rugby World Cup and said: “It is not stupid, and nobody can think of it as stupid.”

He said SAA has made some progress, despite the fact that “objectionably the truth is that it is operationally and financially challenged”. These included reviewing its evergreen contracts with vendors to effect savings of R500 million, securing delivery of new aircraft which should make its Asian routes more viable and putting in place a capable and committed management that can deliver on its business goals.

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Source: IOL