National carrier ‘on path of self-destruction’

The embattled national airline said it was focused on growing its revenues and would continue to apply cost-cutting measures.

It said it was operating in a highly competitive industry and was aware of the risk from external factors.

The DA’s Alf Lees said it was greatly concerning that SAA was predicting losses of R1.8bn, more than the R1.7bn loss that was projected four months ago.

“This will represent a real cash loss as it will not contain the R1.9bn Airbus deal impairments that contributed to the R4.9bn loss in the 2014/15 year,” Lees said.

“The DA will write to Finance Minister Pravin Gordhan to urge him to refuse any further financial assistance to SAA, which is set on a path of self-destruction.”

He said SAA could only be saved if it were put under immediate business rescue, and action taken to achieve a private equity deal that would result in capital revenue for shareholders and taxpayers.

When he tabled the Budget last month, Gordhan warned state- owned entities the National Treasury would keep a watchful eye on risks linked to spending pressures amid slow economic growth.

The Budget Review stated the financial condition of state- owned companies and public entities represented another significant risk over the medium term.

“Several state-owned companies, including South African Airways, require close monitoring and many require intervention to stabilise their operations,” the Budget Review said.

It said state-owned entities facing difficulty would have to demonstrate tangible progress in returning to profitability.

“Government will also explore opportunities to expand private participation,” the Budget Review further said.

Gordhan said at the time that there would be equitable funding to be made to the SAA. “That is work in progress, and I will inform you in due course,” he said.

However, he said if there were new needs within state- owned entities, there should be reprioritisation of the matters.