Troubled South African Airways should be shut down, according to the country’s finance minister.
The nation’s flag carrier “is loss-making, it’s unlikely to sort out the situation, in my view we should close it down”, Tito Mboweni reportedly said at an event with investors in New York yesterday.
SAA has not made a profit for years and has needed $2 billion of bailouts over the last half-decade to stay in the air, even as other African state-owned airlines such as Ethiopian Airlines and RwandAir have overhauled operations.
The closure of SAA would be a powerful admission by president Cyril Ramaphosa’s government that it cannot save one of South Africa’s highly indebted state-owned companies, which are critical to the economy, the Financial Times reported.
Since coming to power Ramaphosa has promised to revive several state-owned groups that were beset by alleged waste and corruption during the presidency of Jacob Zuma.
Ramaphosa endorsed a turnaround strategy for SAA under new management when he became president earlier this year.
Under the plan SAA is asking the state to provide more than 21 billion rand in equity and debt refinancing, and to accept another three years of losses while it cuts costs and staff.
The longer-term goal is to convince a big foreign investor, such as another airline, to recapitalise SAA.
But Mboweni said: “It is unlikely that you are going to find any private sector equity partner who will come join this asset.”
He had already said SAA was not a “not a holy cow” when he unveiled a fresh 5 billion rand bailout to avert a loan default last week.