State Airline Should Prepare for Equity Partner-South Africa

State Airline Should Prepare for Equity Partner-South Africa

South Africa’s Ministry of Public Enterprises said on Sunday that struggling state-run South African Airways (SAA) should reduce its cost base and prepare for a strategic equity partner in the near future.

New Finance Minister Tito Mboweni on Thursday said that SAA, which has not generated a profit since 2011 and survives on state guarantees, was unlikely to find a private sector equity partner and should be closed down.

The Public Enterprises ministry said the airline should stop all fraudulent contracts, address its cost base, discipline those implicated in corruption and prepare for an equity partner.

The ministry said in a statement “The immediate priority for the Ministry of Public Enterprises is to stabilise SAA financially and through a rigorous process of cost-reduction and commercial re-orientation”.

The ruling African National Congress (ANC) also said on Sunday that there was no intention to shut down the airline, “The focus now is on decisively tackling the challenges besetting the national carrier”.

In August, President Cyril Ramaphosa transferred oversight of SAA to the public enterprises ministry, which is led by Pravin Gordhan from the finance ministry. Ramaphosa has pledged to revive struggling state firms, including SAA.

SAA for over decade has lost its place as Africa’s biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers who have forked out more than 30 billion rand ($2 billion) since 2012 to keep it in the air.

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