President Cyril Ramaphosa has explained some of the logistical reasons behind keeping the ailing South African Airways open.
As part of a parliamentary Q&A session on Tuesday (6 November), the president said that the national carrier still had a number of debt obligations.
“SAA is laden with debt,” Ramaphosa said. “If you were to say sell SAA today you would not be able to get anything for it. In fact, you would have to pay someone billions of rands to take it off your hands.”
Ramaphosa said that this is because the debt carried by SAA and underwritten by government was quite significant.
The president added that there were similar implications for letting the state-owned enterprise fail or shut down.
“If we were to shut it down, it basically means that the debt would become payable immediately.
“That debt will also immediately have an impact on the debt carried by all other state-owned enterprises, which may even collapse our fiscus.
“In the end, we have to stabilise SAA.”
He further confirmed that government was looking at the possibility of a strategic equity partner, and that other state-owned enterprise may also be open for opportunities for strategic partners.
The National Treasury allocated R5 billion to SAA in last month’s mid-term budget to help repay debt, but told the carrier that it’s responsible for talks with creditors to restructure the full amount.