SAA’s last chunk of debt to be paid, Tito Mboweni says in MTBPS
The finance minister says the choice to continue bailing out SAA is one to ‘subsidise the middle class and wealthy’ rather than ‘workers who sit in old trains, every day, getting stuck’
The government will pay off the remainder of SAA's debt, which stands at R9.2bn, over the next three years.
But finance minister Tito Mboweni made his feelings on the loss-making airline clear, saying to parliament in his medium-term budget policy statement (MTBPS): “How long are we going to be on this flight path? Forever? I think not. Operational and governance interventions are required urgently!”
Treasury official Tshepiso Moahloli said that SAA continued to burn about R500m a month. The board of the airline had committed to turning the airline around, dependent on government support of R21.7bn. With the R9.2bn now taken care of, government support has now reached that threshold, she said.
“SAA is unlikely to ever generate sufficient cash flow to sustain operations in its current configuration ... I am pleased to learn that there are conversations involving SAA and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles,” he said.
In a briefing to journalists before the speech, Mboweni said he thought that the government was seriously looking at which state-owned assets to sell.
“Maybe the time has come to close down SA Express. This might be a test case for us to close something else, which I am not allowed to mention,” he said.
The choice to continue bailing out SAA was one to “subsidise the middle class and wealthy” rather than “workers who sit in old trains, every day, getting stuck and late for work”.
“We are also subsidising the wealthy bond holders who hold government-guaranteed debt but receive higher yields without additional risk,” he said.
State-owned enterprises, excluding Eskom, also received R10.8bn during 2019 via the contingency reserve. SAA got R5.5bn; SABC R3bn; Denel R1.8bn and SA Express R300m.
The Treasury would, from now, distinguish clearly between payments to state-owned companies that were equity injections from the shareholder and those that were loans and must be repaid.
“Going forward, new cash flow support will no longer be equity but will be in the form of loans,” Mboweni said in his speech.