SAA should be shut down, says Mboweni

SA’s finance minister said the nation’s troubled flag-carrier should be shut down, casting doubt on President Cyril Ramaphosa’s stated goal of saving what was once Africa’s biggest airline.

SA’s finance minister said the nation’s troubled flag-carrier should be shut down, casting doubt on President Cyril Ramaphosa’s stated goal of saving what was once Africa’s biggest airline.

South African Airways (SAA) “is loss-making, it’s unlikely to sort out the situation, in my view we should close it down”, said Tito Mboweni, the outspoken former Reserve Bank governor, at an event with investors in New York on Thursday.

The closure of SAA would be a powerful admission by Ramaphosa’s government that it cannot save one of SA’s highly indebted state-owned companies, which are critical to the economy.

Since becoming president, Ramaphosa has promised to revive several state-owned enterprises that were beset by alleged waste and corruption during the presidency of Jacob Zuma.

SAA has not turned a profit for years and has needed R30bn of bailouts over the last halfdecade to stay in the air — even as other African state-owned airlines such as Ethiopian Airlines and RwandAir have overhauled operations.

SAA’s decline accelerated under the chairmanship of Dudu Myeni, a friend of Zuma, who was accused by opposition parties of running SAA as a personal fiefdom to dispense political favours.

Myeni, who left SAA in 2017, could not be reached for comment, but she has previously denied wrongdoing.

Zuma has always denied involvement in wrongdoing.

Ramaphosa endorsed a turnround strategy for SAA under new management when he took over. He replaced Zuma after a power battle over corruption within the ANC.

Under the plan the stateowned airline is asking the government to provide more than R21bn in equity and debt refinancing, and to tolerate another three years of losses while it cuts costs and staff. Its longer-term goal is to convince a big foreign investor, such as another airline, to recapitalise SAA.

But on Thursday, Mboweni said: “It is unlikely that you are going to find any private sector equity partner who will come join this asset.”

The finance minister had already said that the airline was not “a holy cow” when he unveiled a fresh R5bn bailout to avert a loan default last week.

SA’s public finances have been left stretched by Zuma’s rule and there is little left for big bailouts of state firms.

Despite growing clamour from opposition politicians and trade unions for SAA to be shut down, executives at the airline say that it is not possible to abandon its debts without imperilling government finances further.

Defaulting on any one loan to SAA would trigger legal terms for immediate repayment on the rest of its debt.