By Ainsley Ash
MAIN PHOTO: After being placed under business rescue in December, South African Airways has been denied further funding from the government. SOURCE: Maria Tyutina on Pexels
The South African government has denied further funding to South African Airways, its national carrier.
In a letter signed by Minister of Public Enterprises Pravin Gordhan and addressed to the airline’s business rescue administrators, SAA was told that the government would not support the airline’s bid for funds from foreign banks, nor was it able to offer any funds itself.
The airline was placed under business rescue in early December 2019.
Gordhan’s decision comes after SAA asked the government for an additional R10 billion to supplement the R5.5 billion it had already received for business rescue operations.
Gordhan ‘s letter said the government would not be able to provide additional funding because the Covid-19 pandemic had “stretched national government resources”.
The airline has accumulated R26 billion in losses over the past six years and last turned a profit in 2011. SAA has largely relied on state bailouts to continue operations throughout these years.
The EFF has responded to this decision by accusing Gordhan of engineering the “deliberate collapse” of the airline. In a statement released on Wednesday, the EFF said that it was disingenuous to label the requested R10 billion as a bailout, because the funds would put in place measures that would have rescued the organization and secured jobs.
“It is therefore clear that Gordham has no intention of rescuing SAA or protecting the incomes and livelihoods of its employees,” the statement said.
The EFF called for a multi-ministerial oversight of all State-Owned Enterprises “to prevent the inevitable arrogance of Gordhan from collapsing them”.
SA Express, the regional carrier, is also facing uncertainty. In March, the Business Rescue Practitioners made the decision to liquidate SA Express.
According to notes prepared for a briefing to journalists by Minister of Finance Tito Mboweni on Tuesday, economic measures being considered by the government include the “consolidation of public entities and closure of SAA and SA Express”. However, Mboweni later told journalists that he was unaware that the phrase had been included in his notes, reports the Daily Maverick.
SAA has halted all domestic and international commercial flights since the government imposed the coronavirus lockdown on the country. Apart from recent chartered repatriation flights, SAA has been out of operation since the end of March.
