State still weighing up option of airlines partner
The merger of SA’s three state-owned airlines has been on the agenda of Public Enterprises Minister Lynne Brown for some time
The government still has to decide whether or not to introduce a minority equity partner into its state-owned airline assets, says Finance Minister Malusi Gigaba.
There was no certainty that if the state were to decide on this option that the strategic equity partner would come from the private sector.
Replying to questions in Parliament on Wednesday, Gigaba said the Treasury still had to review the report by consultants Bain & Co SA, who were appointed to look at all options regarding the optimal ownership and corporate structure of the state-owned airlines.
These included the financially fragile South African Airways (SAA), South African Express, Mango and a 2.5% stake in South African Airlink.
The merger of the three airlines has been on the agenda of Public Enterprises Minister Lynne Brown for some time.
Gigaba said the government would have to review the options and recommendations in the Bain report. This would also have to be aligned with the review being undertaken by Seabury of SAA’s long-term turnaround strategy, which would include a proposal on the rationalisation of routes.
"The review by government will determine whether strategic equity partners, if any, would become part of the ownership structure of the state-owned airline assets," Gigaba said in reply to a question posed by DA MP Alf Lees.
Gigaba noted that if a strategic equity partner was agreed to it would not necessarily be from the private sector.
"There are also options available for the minority equity partner to be a public entity. But that determination has not been made yet," the minister said.
He said the Treasury stressed that SAA had to be turned around and return to financial health and sustainability.
The floundering airline has suffered repeated losses, has a weak balance sheet and relies on a state guarantee of R19bn to keep afloat.
Gigaba said no single solution would solve all the airlines’ problems. Attention was being paid to governance, cost-cutting and rationalisation.
On Tuesday, director-general Lungisa Fuzile said the Treasury had decided to make a cash injection into SAA to strengthen its balance sheet. This would happen in 2017, the outstanding question being how much would be invested.
Heated exchanges erupted in Parliament when Gigaba postponed answering questions by the EFF and the DA about the attendance of his wife, Norma, on his international trip to Washington and New York to meet investors. All Gigaba was prepared to say was that his wife did not attend meetings.
EFF MP Ntombovuyo Mente said this expenditure was unwise by a minister who was in charge of cost-cutting.