Cape Town – South African Minister of Finance Enoch Godongwana has reportedly said that the South African Airways (SAA) has cost the country R49 billion in bailouts since 2007.
Godongwana and Public Enterprises Minister Pravin Gordhan briefed parliament’s Standing Committee on Public Accounts (Scopa) on Tuesday, The Citizen reported.
Godongwana and Gordhan said that the billions that had been poured into the airline justified the selling of a majority stake in the national carrier to a private partner.
“Since it was taken out of Transnet in 2007/8 it has cost the state, to date, R49 billion. So, there’s no doubt that it has been a fiscal drain,” said Godongwana as quoted by the report.
SAA was placed under a state-approved rescue plan in December 2019 in an effort to save it from collapse.
The airline had not posted a profit since 2011 and survived for years on state bailouts.
A symbol of the mismanagement of state-owned enterprises that characterised ex-president Jacob Zuma’s reign, the airline was forced to abandon many routes even before the Covid-19 pandemic.
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Last year, the government agreed to sell the airline’s majority stake to independent investors.
“Having evaluated the current environment, government has agreed to the (strategic equity partner) owning of 51% of the shareholding and government 49%,” Gordhan said during an online media conference at the time.
According to EWN, committee member Ntombovuyo Mente questioned the structure of the deal and who would benefit.
“Is it just going to deal with the side of manpower and personnel that they are going to hire at SAA? This has to benefit our people,” said Mente as quoted by the report.
The report added: “Gordhan said the private equity partner would contribute R3 billion in the deal, adding that government could always buy back its stake in the airline in future”.
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Compiled by Sinothando Siyolo
Additional reporting by AFP
