SAA may get lift from a private partner

JOHANNESBURG – The government yesterday moved a step closer to opening SAA to partial private ownership saying it had established an oversight committee to look into the possible involvement of a private partner in the affairs of the embattled national carrier.

It said the committee, to be chaired by Deputy Finance Minister Mondli Gungubele, would look at the airline’s liquidity problems and advise on the private partner.

The committee is expected to finalise its work in September.

SAA board chairperson Bhekumuzi Magwaza said SAA needed to get out of financial trouble soon and the oversight committee could be able to do that.

“It is clear that we have liquidity and going concern issues. Those issues still continue to the extent that it was decided with the National Treasury that we should form an oversight committee chaired by the deputy minister,” said Magwaza.

The airline admitted yesterday that its finances were still dire, telling Parliament that it would need R12.5billion for working capital in the next three years. It said it would also need R9.2bn to settle its loans by March next year.

Gungubele said the deadline for the committee to finish its work could be extended if it had not finished its work within the stipulated time frame.

“If for whatever reason by September we have to review we will,” Gungubele said. “We wish it doesn’t happen.”

Gungubele said the committee would also look at the merger of SAA, Mango and SAX.

“The anxiety is that when you are dealing with the airline you must be dealing with all the airlines. This board is seized with this. We as the government are seized with that,” he said.

When questioned by DA MP David Maynier if the government had given SAA a commitment letter to get R5bn, he confirmed it had.

“The guarantee letter of R5bn is not a secret. It’s been done,” said Gungubele.

SAA chief executive Vuyani Jarana said the airline suffered a loss of R5.7bn for 2017/18 due to high operating costs, low passenger volumes and increased fuel costs. He said the airline needed at least R12.5bn in capital funding to break even.

“The reason we said we need R12.5bn over the next three years is because of all this. For a going concern there needs to be a sense of commitment to a break-even point in 2021. Part of the reason we said National Treasury must be part of the oversight forum is to have a sense of assumption. There is a need to support SAA over this period of time,” said Jarana.

– BUSINESS REPORT