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SAA gets breather from Budget

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·        In a significant development, South Africa’s National Treasury has defended a controversial R10.5 billion (US$641 million) lifeline for its bankrupt national airline –SAA-on the plea that its recovery would entice private investors

·        The government’s bailout plan, according to its officials, is to nurse the sick airlines back to pink of health and then sell it

·        That way, the government feels, there can be more suitors for he airlines, which for the last 10 years or so has been running with the government support

In a significant development, South Africa’s National Treasury has defended a controversial R10.5 billion (US$641 million) lifeline for its bankrupt national airline –SAA-on the plea that its recovery would entice private investors. However, it has made it clear that the Government was not going to hold on to South African Airways at all costs. The government’s bailout plan, according to its officials, is to nurse the sick airlines back to the pink of health and then sell it. That way, the government feels, there can be more suitors for the airlines, which for the last 10 years or so has been running with the government support.

Public Enterprises Minister Pravin Gordhan and his department are the most vocal supporters of the airline’s rescue. They have been claiming repeatedly that a number of private investors are queuing up to buy the airlines once it is rescued. . However, their detractors point out, barring perhaps the   Ethiopian Airlines Group, Africa’s biggest carrier, no one has ever evinced interest in the loss making airlines. However, Ethiopian had made it clear that it was not interested in an operational role, while airlines around the world are bleeding.

Gordhan welcomed the bailout plan announced last  Thursday by finance ministerTito Mboweni to bring back the beleaguered airline to some resemblance of stability, it has to   appoint an interim board, chief executive officer and chief financial officer. SAA has stopped operations since the grounding of aircrafts on account of the Covid-19 pandemic. Earlier to that also, the airline has considerably truncated its operations by cutting down the routes and rationalizing the existing ones to minimize the deployment of aircrafts.

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