Carrying the national carrier cannot go on

South African Airways had its beginnings in 1934, when the South African government took over the assets and liabilities of the failed Union Airways.

Some 84 years later, SAA is itself a failed airline, kept afloat by billions of rands in government bailouts and government-guaranteed loans.

But for these loans and bailouts, the abortive airline would have crashed and burned years ago.

None of the purported turnaround strategies has worked.

Instead, over the past decade, the taxpayer has been forced to sponsor the outrageous corruption and hopeless mismanagement at the national carrier to keep it in the air.

“The definition of insanity,” said Albert Einstein, “is doing the same thing over and over again but expecting different results.”

Having pumped billions into the airline in the futile hope that things might miraculously change, nothing has. Instead, like Charles Dickens’ desperate orphan, Oliver Twist, SAA has come back to parliament, hat in hand, asking for more.

SAA CEO Vuyani Jarana says the airline needs R21.7bn to turn the company around and put it on a sustainable footing. It needs some R17bn by March.

This is made up of R5bn to repay short-term loans that mature now, R9.2bn to repay loans that fall due in March and R3.5bn in working capital to meet salary and other commitments. It was envisaged that it would make a profit by 2020 but Jarana has now pushed the “break even” date back to 2021.

Between now and then it is reportedly estimated that the airline will lose another R12bn.

While finance minister Tito Mboweni has urged selling or closing down the national carrier, public enterprises minister Pravin Gordhan has toed the government line about putting it on a sustainable footing before finding an investment partner.

To do so will require more lending from increasingly reluctant banks even though the government has undertaken to stand surety.

And round and round we go. Government guarantees of state-owned enterprises loans now total over R430bn, and rating agencies have repeatedly warned that this poses one of the greatest risks to the South African economy.

One way or another, the government is going to have to staunch the bleeding at SAA.

Constant recapitalisation of a failing venture is, on Einstein’s rationality scale, sheer madness.

Government guarantees of state-owned enterprises loans now total over R430bn