SAA told to prepare for new equity partner
The Department of Public Enterprises has called on South African Airways (SAA) to reduce its cost base and prepare for a strategic equity partner in the near future.
In a statement released on Sunday (4 November), the department said its immediate priority is to stabilise SAA financially through a rigorous process of cost-reduction and commercial re-orientation.
“It is imperative that the executive management apply its mind with clear focus to the immediate task at hand, including addressing the airline’s cost-base, stopping all fraudulent contracts, disciplining and instituting appropriate civil and criminal actions against all persons inside and outside the business who are implicated in corruption, and preparing SAA for a strategic equity partner in the near future,” it said.
“This is the path to ensure the future sustainability of the airline, the preservation of jobs and for SAA to become a vibrant competitor in the aviation market in South Africa and globally.”
It added that the recent appropriation of R5 billion in the Medium Term Budget Policy Statement was a further expression of this intent, and would provide a degree of immediate financial stability while the airline’s board and management looked at restoring the airline financially and operationally.
The statement follows comments made by finance minister Tito Mboweni on Thursday (1 November), in which he called for the struggling airline’s closure.
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.
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