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Treasury defends SAA bailout as it seeks partners

Says setting it on the path to recovery will entice private shareholders.
Image: Tod Burns

South Africa’s National Treasury has defended a controversial R 10.5 billion lifeline for its bankrupt national airline, saying that setting it on the path to recovery will entice private shareholders.

“Government is not going to want to hold on to South African Airways at all costs,” Treasury Director-General Dondo Mogajane said in an interview after the bailout was announced on Wednesday. “If that means giving up the majority shareholding, that will happen.”

While the airline hasn’t made a profit for almost a decade and has long relied on state support to fly planes, administrators appointed late last year have a produced a viable rescue plan, Mogajane said. If it can be implemented, as many as five potential strategic-equity partners are waiting in the wings, he said, without naming them.

“Most of them are saying fix the old, pay off the debt — and then we will come on,” Mogajane said.

Read: Government bails out SAA again

The claim that a number of private investors are queuing up to take responsibility for SAA is a familiar one, having been made repeatedly this year by Public Enterprises Minister Pravin Gordhan and his department, the most vocal supporters of the airline’s rescue.

Yet so far, the only potential backer to officially come forward has been Ethiopian Airlines Group, Africa’s biggest carrier, which made clear it was interested in an operational role rather than providing cash. Airlines around the world are battling their own crises due a a slump in demand for air travel amid the coronavirus pandemic, and the emphasis has been firmly on cutbacks rather than expansion.

SAA is too important for the local aviation market to fail, said Mogajane. The cash will be used for worker-severance packages and ticket refunds as well as basic startup costs, according to the rescue plan published in June, and come from government departments including education, police and health.

SAA hasn’t flown a commercial flight since its planes were grounded to contain the coronavirus in March, and travel restrictions remain in place to several key destinations to prevent a resurgence in infections.

© 2020 Bloomberg

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Who is the “Local Aviation Market”????

When it comes to SAA its the ANC cadres, their families and friends. Keep in mind they don’t pay. Your caring ANC government does.

Remember a few months ago……….”read my lips, no more bailouts for SAA”

“SAA is too important for the local aviation market to fail, said Mogajane”

I’m not sure he’s living in the same world as the rest of us:

1. it already has failed;

2. a free market will provide a service where there is demand.

SAA serves no purpose and it’s continued existence is a national disgrace as it shows two fingers from an uncaring government as it flys ANC cadres over the squatter camps.

Let it go, we cannot afford SAA.

Why are the jobs protected at SAA when the jobs in the private sector are not protected?

Why must the tax payer pay for SAA?

It is like the man on the street has to pay SAA and gets nothing in return. Does not make sense!

If it looks like a duck, quarks like a dike, walks like a duck then surely this is another bailout.

In this case it looks like a dead duck, quacks like a dead duck, walks like a dead duck. To solve this dilemma the ANC has now re-defined ‘dead’. Problem to them is, will voters agree with this new definition when it comes the ANC itself?!

ANC government hoping that somewhere on earth they will find a masochist keen to burn his fingers with SAA ? Going to be a long wait .

SAA will be back for more before they even get airborne.

Downfall of SA finances can be attributed to Pravin Gordhan (and this guy was the former finance minister) and Tito. Thanks Guys!

The unborn will remember you for a long time to come!

The trough has been reloaded!

End of comments.

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