Business / Business News
South African Airways (SAA) will take the travel industry down with it if it tanks, says an industry association.
This on the back comments made by Public Enterprises Minister Pravin Gordhan in parliament on Wednesday night, when he appeared before the standing committee on public accounts (Scopa) alongside the business rescue practitioners appointed to try and turn the state carrier around.
Last week, Finance Minister Tito Mboweni announced yet another bailout for SAA – this time of R10.5 billion – and Gordhan told Scopa the state carrier was too important to be allowed to fail.
Board of Airlines of South Africa chief executive Zuks Ramasia said on Thursday SAA was central to the connectivity between various regions.
“The travel industry would suffer as SAA provides essential connectivity, particularly domestically and regionally,” said Ramasia.
South Africa’s status as a strategic hub and aviation gateway to Africa would further suffer in such a scenario, she added.
The demise would eliminate essential connectivity and capacity between OR Tambo International Airport and the rest of the continent.
The department of public enterprises said SAA would use its most recently announced cash injection to revamp its operations.
There was also a view to develop an operating model that was similar to that of Telkom.
According to Gordhan’s spokesperson, Sam Mkokeli, a new management team and board would soon be appointed to guide the business.
He said a strategic equity partner would be attracted – although earlier in the day Gordhan had told parliament he could not reveal the details of this imminent deal, lest it be jeopardised.
“The new airline will incorporate some of the corporate and accountability systems from the Telkom model,” Mkokeli said.
Asked why the airline was worth saving, Mkokeli said SAA was a good brand that crashed due to a long history of bad management, corruption and state capture and that this had created anxiety in society – and justifiably so.
“The restructuring of SAA through business rescue is designed to write an entirely new chapter for the national carrier.
“This will be done by addressing the structural weaknesses and bad practices that had become a drag on the business,” he said.
As to whether there was private sector interest in the airline, Ramasia could only refer to recent public pronouncements by Gordhan.
“There have been airlines and entities who have shown interest, according to the SAA shareholder [department of public enterprises], as stated in recent media pronouncements,” she said.
However it was undeniable, in the association’s eyes at least, that the airline had potential and was worth saving.
SAA had many partnerships in the form of, among others, codeshares, providing connectivity for “feeder” traffic into South
Africa and the African region.
According to Ramasia, SAA had the opportunity to create a sustainable and viable network schedule on the African continent, in addition to the job creation and economic growth potential a national carrier brought with it.
But the airline needed to return to the hands of aviation professionals, she said.
“What is very important is for SAA to be run by aviation professionals, local South Africans who understand the landscape, both
domestically and internationally, with no interference from a political perspective,” she said.
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