NEWS

Why We Won’t Ground SAA – Gigaba

Our national airline has been down in the dumps for years and years. But the finance minister says SAA will stay.

25/10/2017 14:06 SAST | Updated 25/10/2017 14:06 SAST
Siphiwe Sibeko / Reuters

Even though it received two massive bail-outs in the past year, embattled national airline SAA will be kept in the air.

Finance Minister Malusi Gigaba said in his mini-budget speech in Parliament on Wednesday that it is "in the public interest" to have an airline that connects South Africa with the rest of the world.

According to the budget review, National Treasury's policy document that sets out the current economic challenges and charts a path forward, state-owned companies pose a "clear and substantial danger" to public finances. SAA received a bail-out in February's budget of R4,8-billion. That was followed up recently by another pay-out of R5,2-billion.

The bail-outs were made out of the country's national contingency reserve, essentially the state's piggy bank. These pay-outs –- and other guarantees to state-owned companies –- have put enormous pressure on government's ability to manage its debt, and has led to the country's expenditure ceiling (the expenditure limit Treasury sets for government spending) being breached.

Giagaba, however, told MP's that government acknowledges SAA's challenges, but that it remains convinced of the virtues of keeping SAA flying.

It is in our national interest to have influence over our connectivity to all parts of the world, and not have to rely exclusively on the profit and scheduling considerations of global airlines

"SAA sells South Africa's economy, tourism and culture to every one of its passengers. Global airlines do not, and will not, perform this priceless marketing and branding role for us. So let us not ignore the contribution SAA is making to our nation's development, even as we insist on dramatic improvements in its governance, strategy and operations."

The minister thanked local lenders for their "understanding and patriotism", and hinted at the merging of some carriers that fall under SAA and the department of public enterprises when he said he will soon make announcements about the "consolidation of aviation assets" and bringing aboard new equity partners.