SA finance minister suggests closing down national airline

By Unathi Nkanjeni,

South Africa’s finance minister, Tito Mboweni has suggested that it would be better to close down South African Airways (SAA) and start a new airline.

SAA’s financial problems are at the centre of conversations in South Africa and continue to make headlines.

Speaking on Power 98.7, Mboweni said: “It unlikely that this would be sorted out, so my view is to close SAA down.

Finance minister Mboweni

“Close it down and start a new airline. All together, invite [CEO of Standard Bank] Sim Tshabalala and others to come together and form a new airline,” he suggested.

Mboweni said the reason he thought closing down SAA would be better than continuing efforts to turn it around, is that it was unlikely the airline would find a private-sector partner.

This is not the first time Mboweni has suggested that the national carrier be shut down.

In his medium term budget policy speech in October, Mboweni said SAA was unlikely to generate sufficient cash flow to sustain operations in its current configuration.

He said an equity partner was needed to save the airline from “financial ruin”.

“It is unlikely ever to generate sufficient cash flow to sustain operations in its current configuration, which then begs the question: how long are we going to be on this flight path? Forever? 

“I think not. Operational and governance interventions are required urgently.”

SAA staff strike

The national carrier’s employees are protesting against possible job cuts and are demanding an 8% salary increase, while SAA says it is only able to offer 5.9%, and only from March 2020.

On Thursday, the strike entered its seventh day. While the company’s management announced the return to work of some of its employees on Tuesday, others continue to stay away.

SAA acting chief executive Zuks Ramasia says the airline will approach the labour court to interdict Numsa and Sacca from making further demands.

TimesLIVE reported that minister of public enterprises Pravin Gordhan said, while two unions at SAA were demanding salary increases, the government would not give SAA another bailout.

During a briefing in parliament on Wednesday, Gordhan warned that the airline might not be able to pay salaries at the end of the month.

According to an eNCA report, Gordhan also said the government could not afford the unions’ wage demand as it had no additional funding.

“We may not have enough cash to pay salaries at the end of the month. We are still investigating how we can do that.

“This is a real-time discussion we are having with National Treasury and the department of public enterprises. We need help imminently.”