STATE WON’T LET SAA CRASH

Government is determined to hold on to airline, despite virtually bankrupt national carrier coming under increasing pressure as financial institutions turn away from it.

Government is adamant it will hold on to SAA, despite the virtually bankrupt national air carrier coming under increasing financial pressure. Financial institutions are turning away from it amid fears that it may implode.

Speaking yesterday after a meeting with CEOs who are part of the CEO Initiative at National Treasury, in Pretoria, Finance Minister Malusi Gigaba reiterated government’s commitment to owning an airline.

“We are on the southern tip of Africa and as such, far away from the busy routes of the northern hemisphere. We do need a stateowned airline,”he said.

“We need to guarantee air travel for tourism and investors to our country. The best way to do that is to have an airline.”

However, Gigaba would not reveal details of how exactly SAA would be recapitalised, saying a decision should be approved by Cabinet by the end of next month.

Gigaba dodged questions from media on what options are being considered to raise the R10 billion that Treasury believes would be adequate to recapitalise the airline. However, he reiterated that the recapitalisation would most likely be funded through the sale of “noncore” assets – something many people have interpreted as government selling its shares in Telkom.

That government was mulling the sale of its nearly 40% shareholding in Telkom, valued at more than R14 billion, was revealed in parliament on Wednesday when Democratic Alliance MP Alf Lees told Deputy President Cyril Ramaphosa that he had a “secret” – stating that Gigaba was planning to allocate R10 billion to SAA.

The finance department has since insisted that the plan to sell off government’s stake in Telkom to bail out SAA was but one option being considered.

In reaction, Business Unity South Africa President Jabu Mabuza, who is also the chairperson of Telkom, chided government for allowing details of a potential sale of its Telkom shares to become public.

“At Telkom, we do not choose our shareholders. We want our shareholders to be careful about what they say about what they will do with their shareholding. Please do not create unnecessary problems for us,” he said.

We are at the southern tip of Africa, and far away from the busy routes. We need a state-owned airline. Malusi Gigaba Minister of Finance

Meanwhile, Citibank has become the second bank to refuse to extend its loan to SAA, according to a Business Day report. In this case, the bank would not lend R1.8 billion to the airline, after Standard Chartered Bank refused in June to roll over its loan of R2.2 billion to SAA.

This move prompted Treasury to step in so that the airline could settle its debt.

However, Citibank’s refusal is seen as sign of fears among banks that the carrier will implode.

According to Business Day, the Citibank loan is one of several, all amounting to R6.8 billion, which becomes payable at the end of September. It is understood that SAA will not be able to pay its debt to Citibank. – Additional reporting by Martin Czernowalow