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Enterprise ministry says SAA should prepare for equity partner

ANC says it has no intention of shutting the state airline down.

The 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.

Finance Minister Tito Mboweni had said on Thursday 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.

Read: Mboweni warns of tough choices as SA debt climbs

“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 ministry said in a statement.

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,” the ANC said in a statement.

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.

Over the past decade, SAA 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 R30 billion since 2012 to keep it in the air. 

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The public have lost faith in everything the ANC says and does. Most of the yapping is put out there so that we loose the scent of actions and scandals that the ANC are involved in. SAA mismanagement and the corruption that is going at that SOE is the included. Fast tracking actions, arrests without bail and judicial convictions is the only way to get the confidence of the public back. In the time Squirrel has been President, almost nobody has been charged and brought before the courts or even lost their jobs, been suspended over state capture, mismanagement of assets, lying under oath, etc. and the list goes on. He was Zuma’s deputy for a long time. There is no way that he is oblivious to names, places, actions and processes that went on. It may be that his inability to rule as is expected of an honest President is that he either knows too much, or he is covering for his corrupted friends, or he is implicated as well, and his fear of others exposing him if he becomes the whistle blower is keeping him from taking decisive action. I am in two minds about this.

Unfortunately Gordhan is part of the problem. Escom salary increases but one example. A socialist at heart who is part of the problem and not part of the solution. It will all end in an utter disaster as the Unions are in control and they think money grows on trees.
Remember ANC is the creator of freedom before education, rolling mass action etc – now the baby is an uncontrolable adult. What to do now ? You have to crush the power of the Unions like Maggie Thatcher did and if you compare UK of 1979 and now – different place. Remember her quotes about socialism and also ANC? All come to pass here

Who would be dumb enough to buy equity stakes in this wealth destroying pit??

Just as there a people out there that will buy houses and renovate; here are businesses out there that see opportunities. Lets sit back and see; it cannot get worse than the current situation.

I suppose the state can chuck another 40billion after Zima inc took half a trillion with the guptas

But a terminal entity is going to end period

Oh, this so-called equity partner – whoever that might be – is probably already lined up and will bail out the monies SAA has to pay by March 2019!

All good and well, but SA taxpayers should boycott that airline and equity partner because of all the tax it has swallowed up – PRIVATE airlines are FAR BETTER!

(Hope the equity partner isn’t the Guptas in disguise…..)

Tragic stupidity are the only words that comes to mind . Erik Venter the CEO of Comair ( kulula and british airways ) lives in SA and manages the same business in the same country and has never made a loss over any financial year .
Surely any sane Minister of Public Enterprises would think it wise to visit Erik for friendly and free advice over a cup of coffee . No need to spend many
millions on foreign advisors .
But to acknowledge that they dont know what to do ,requires a level of honesty that does not sit well with government .

Well my guess is that it is designed to work like this. Advertise the opportunity but to suitable BEE companies only. After much to’ing and fro’ing, one such BEE (not really BEE of course but connected cadres) company is selected. It’s member just happen to include the Shanduka Trust, the Rdebe Trust, Patrice Motsepe, Vivian Reddy / Anant Singh and one or two others. This company now starts raising money to put into SAA as an “equity partner”. Dutifully the IDC, PIC, the new VBS bank (which holds SASSA money ha ha) and one or two others stump up the money. The company owners contribute not one SA cent.

The money finds its way into SAA which, as part of the deal, immediately starts paying management fees to the company owners; a few hundred thousand per month to each one. The rest of the cash is used to grease the established routes by which SAA became a loss leader in the first place. After a few years the money is finished and the cycle is re-started; after many court cases and expensive lawyers.

Rinse and repeat until replete, which is never in the third world.

PIC?

Public Investment Corporation?

Yes, or the Guptas i disguise. It’s going to have to be someone with DEEEEEPPP pockets!

If government employees are forced to use a % of their pension contribution as an equity stake in SAA, they may just have an incentive to make it work.

Pay for your bed, make your bed and lie in it.

The ceo has been in the saddle for a year and nothing has been done other than more money paid to expensive consultants/ executives and volumes of vapor wear. Pravin has now put him on notice to do something. Can he actually act?

Seem to recall that one of the previous CEOs like 5 years back did achieve substantial cost savings by retrenching half the work force and cutting back on loss making flights. He was subsequently fired and the new guy came back in and reversed everything before Dudu started causing problems that tipped it over the edge.

Private shareholder makes sense but this has been discussed for years. A private investor would make sense in alot of these SOEs but I doubt it will happen any time soon. Eskom needs to be unbundled, SAA/Trasnet/SABC should have a private stake and eventually list like Telkom but Ramaphosa can’t even fire Gigaba or get the Gauteng/NW ANC to fire other heavily implicated people nevermind clear up the SOEs.

Why do you want to be the owner of a state airline ?….1) Money laundering 2) Drug trafficking 3) Weapon smuggling 4) all of the above

Now that you mention the benefits of ownership there might be quite a number of interested parties lining up….

Pravin you seem to know whats required and no one else to make right SAA affairs. Why dont you relinquish your ministerial post and lead SAA from the front and see how it goes? World over, their are a few/ handful airlines that are running profitably, the rest are bailed one way or the other by the respective govt. The root causes, must be identified and addressed.

Why is Government stubbornly holding on to SAA which obviously is a dead loss and a dinosaur from a by-gone era? My guess: (1) SAA is regarded as a pot of money for the politically connected to dispense largesse and enrich themselves. (2) SAA gives jobs and jobs buys votes for the ANC. Head office at SAA is probably full of employees who achieve very little hence the perpetual financial loss. However, sitting around all day looking for an opportunity to get something for nothing and getting paid for it sounds like a good deal. (3) SAA is willing to fly routes to African destinations like e.g. Ndola, Harare, Lubumbashi and Brazzaville which no other airline is willing to take on because it is not profitable. However, in solidarity with the African continent, big brother SA has to spend money on something which nobody else is willing to do.

Pravin , your commie gobbeldy gook does not fool anybody.
Nobody in their right mind would enter into partnership with a useless, overstaffed company like SAA , they do’nt want your hand in their pocket the way it is in the SA taxpayers’, wake up dude- do yourself a favour , fire them all and sell the aircraft to the likes of Ryanair

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