Gordhan’s SAA flight of fancy can only end badly
What world does public enterprises minister Pravin Gordhan live in? Clearly not the new world of the Covid-19 pandemic, which has seen some of the airline industry’s largest and strongest hit the ground — and which could well change the industry forever. He is busy turning failed South African Airways into “a national asset which is internationally competitive, viable, sustainable and profitable” despite it having proved over at least 20 years — at immense cost to taxpayers — that it is incapable of being anything of the sort.
With borders closed and planes grounded worldwide, the International Air Transport Association estimates the global airline industry will lose $252bn (R4.6-trillion) this year, with many airlines cutting up to 90% of capacity. When the US government put a $50bn bailout fund in place, more than 200 airlines applied, including leaders such as American Airlines and Delta. In the UK, British Airways has said it will have to retrench 12,000 employees, budget airline Flybe has collapsed, and EasyJet and Virgin have taken huge emergency loans.
At home, Comair, SA’s most successful airline with a 73-year record of profitability, has gone into business rescue as it contemplates a prolonged lockdown which it now expects could see it back in the air only in October/November. Comair’s swift business rescue action — which will give it the space it needs to restructure — was in stark contrast to the endless agony which Gordhan has imposed on SA and its national airline by refusing to recognise the reality of SAA’s failure.
The trouble is his delusions are creating expectations — especially among employees — that cannot possibly be met, as well as undermining the business rescue process. That process could have been a chance to salvage something out of SAA, selling the good assets so it could be shut down in a way that inflicted the least damage on stakeholders.
The government cannot afford the R7bn needed for a rescue plan, nor should this be a priority in the midst of the Covid crisis. Gordhan has enlisted the trade unions in his grand plan, further delaying the inevitable. Why President Cyril Ramaphosa lets him continue with this is not clear. But it can only end badly.