South Africa News

Tito Mboweni caves in to ANC refusal to liquidate SAA – Report

According to the City Press, Mboweni proposed to the ANC that the embattled airline be liquidated to start a new one, but the party opted for restructuring which will cost at least R10 billion.

Finance Minister Tito Mboweni has reportedly yielded to the African National Congress’s (ANC) refusal to liquidate South African Airways (SAA) at the party’s national executive committee meeting and lekgotla.

According to the City Press, Mboweni proposed the embattled airline be liquidated and start a new one.

The meeting opted for a restructuring process instead which could reportedly cost the government at least R10 billion.

The embattled state-owned company is fighting for its survival after it entered a form of bankruptcy protection last month and cancelled some flights due to cash shortages.

The paper is reporting that the ANC’s directive to the treasury is to restructure the financially strapped airline and that could cost a further R8 billion to cover expenses related to the restructuring.

The finance minister had to agree with the party’s highest decision-making body during the meeting in Irene Pretoria last week.

The paper says critics say liquidating Eskom could possibly cost R50 billion and that could result in an undesirable credit downgrade for the country.

SAA was promised R4 billion of funding from lenders and the government to sustain rescue efforts but only received R2 billion from lenders.

Mboweni has been instructed by the governing party’s top brass to make R2 billion available to keep the airline going as part of the ongoing business rescue process.

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Source: EWN

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