Finance minister, Tito Mboweni, has called for the closure of South African Airways, according to a report by Reuters.
Speaking at an investor conference in New York, Mboweni noted that decisions over the future of the state carrier were ultimately not under his control, but that it was difficult to see a turnaround for the airline.
“It’s loss-making, we are unlikely to sort out the situation, so my view would be close it down,” Mboweni said.
“Why I say close it down is because it’s unlikely that you are going to find any private sector equity partner who will come join this asset,” Mboweni added.
In May SAA reported losses of R5.7 billion over the financial year, while Mboweni, in his medium-term budget policy statement last week, said that SAA will receive R5 billion through a special appropriation bill to settle debt redeeming between now and March 2019.
SAA CEO Vuyani Jarana has said he is mapping out a punishing austerity plan to turn the national carrier around, which will reportedly require R20 billion to implement. He has said layoffs and other cuts were unavoidable.
The airline is only expecting to break even by 2021.
While a recent tip-off to BusinessTech indicated that these retrenchments may be initiated shortly, SAA spokesperson Tlali Tlali said that any retrenchments would have to follow processes laid out in terms of South Africa’s labour laws – including a consultation process.
“No business the size of SAA or operating legally in this country could take any decision to lay off its employees without following processes laid out in terms of our labour laws,” he said.
“Any process which could result in retrenchments would have to be legally compliant in so far as retrenchments are concerned.
“Compliance demands consultation and where there is consultation, stakeholders will know what is within the contemplation of the employer.
“This means, there is no room for rumours or tip-offs – there is clear process known by all stakeholders concerned.”