Mboweni says SAA Should Be Closed Down, But Airline Shows Signs of Recovery

JOHANNESBURG – South Africa’s new Finance Minister Tito Mboweni said on Thursday that struggling state-run South African Airways (SAA) should be closed down, adding however that decisions over the future of the state carrier were not under his remit.

SAA, which has not generated a profit since 2011, survives on state guarantees and is regularly cited by credit ratings agencies as a drain on the government purse, Reuters said in a report.

“It’s loss-making, we are unlikely to sort out the situation, so my view would be close it down,” Mboweni told an investor conference in New York, which was televised live on South African public broadcaster SABC.

According to SAA however, the situation is being sorted out.

In August, President Cyril Ramaphosa transferred oversight of SAA to the public enterprises ministry which is led by much respected former Finance Minister Pravin Gordhan.

Ramaphosa has pledged to revive struggling state firms, including SAA, since the corruption-fuelled days of Jacob Zuma’s reign, which has seen SA taxpayers have to fork out more than R30 billion ($2 billion) since 2012 to keep it in the air.

SAA CEO Vuyani Jarana has said he is mapping out a punishing austerity plan to turn South Africa’s national carrier around. He has said layoffs and other cuts were unavoidable.

Just over a month ago, SAA announced it was not only on track with its turnaround strategy, but that Quarter One results show that the company is ahead of the plan in its trading performance.

“We have always maintained that it will take us until 2021 to break even,” SAA said in a media statment. “This means that our costs will remain higher than our revenue until we reach the breakeven point.

“We continue to implement initiatives to drive costs down and improve revenue as part of the turnaround strategy. The quarter one results, reflect the Board and management’s commitment to turn the airline around despite the challenges.”

With Ramaphosa sweeping out the corruption that had seeped into state-owned companies, there is new hope not only for South Africa, but for its national airline too.

With Ramaphosa sweeping out the corruption that had seeped into state-owned companies, there is new hope not only for South Africa, but for its national airline too.

A couple of weeks ago SAA was named Best African Airline by the readers of Business Traveller in their 2018 Awards, annual awards which are authenticated by an independent auditing company, and widely recognised as the market’s benchmark for excellence. The airline was placed ahead of Ethiopian, Kenya and Comair (British Airways).

For many South Africans, SAA remains a proud symbol of national heritage and, as SAPeople follower Flavia Giacomozzi says: “It would be sad to see SAA go down…” As proven recently with the Springboks – if SAA has the right people in charge, the right players… and the support of South Africans around the world – anything is possible, and a positive outcome is attainable!

SAA said in the report on its Quarter One performance: “We remain focused on implementing the turnaround plan and we are seeing positive results.”

#SendMeToSA #WithSAA #ProudlySouthAfrican

(Reporting by Olivia Kumwenda-Mtambo and Jenni Baxter; Writing by Joe Brock; Editing by James Macharia and Jenni Baxter)