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ANC resolves to sell off parts of SAA

SAA, like Eskom, is expected to be split.
SAA, like Eskom, is expected to be split.

Portions of South African Airways (SAA), one of the country’s poor performing state-owned enterprises, will be sold to private companies, the ANC resolved at its national executive committee (NEC) meeting last week.

Sowetan understands that the meeting first considered selling SAA in its entirety but it was agreed that the likelihood of anyone buying it was minimal because of its poor financial state.

“The person you are going to sell SAA to, you will have to give them money, not them giving you money, which is a loss,” said ANC economic head Enoch Godongwana.

“It has been mismanaged; I doubt if it owns its fleet, it’s probably a leased fleet. So there’s no asset, I doubt if it even has that, I mean I can’t vouch for it,” he said. 

ANC secretary-general Ace Magashule said that the NEC emphasised the need for investment in the country's infrastructure including SOEs.

"In this regard, public-private partnerships, especially in aviation and energy and other other areas, will be critical," said Magashule.

"It was agreed that that the long-standing ANC policy with respect to strategic equity partners in various state owned companies, and consideration will be given to models of worker and social ownership."

The National Treasury last month approved a R5.5bn bailout for SAA for the 2019/20 financial year.

In order to break even, SAA requires capital of almost R22bn and has so far received just over R10bn in this and last year’s financial periods.

The uncertainty of the required capital being provided by the government led to the resignation of its CEO Vuyani Jarana earlier this year.

Now, instead of bearing the costs, the ANC has resolved that it would look at international airline carriers to buy a chunk of the debt-laden airline.

“Yes, we are looking at international. You are not going to change SAA by simply saying you are going to bring somebody next door. You need cash, you need skills,” said Godongwana.

He said that the conversation would now move to identifying an international airline that is performing well which could be brought in as a partner.

Talking to Sowetan on the sidelines of the ANC NEC report back at Luthuli House in Johannesburg, Godongwana said that unlike Eskom, which provides services to the entire country and plays a critical role in the economy, the decision to sell off part of SAA was not necessarily a difficult one.

“It’s easier because it does not provide the kind of social and public good as others. For instance if we are looking at Eskom.. (it) provides a vital thing for the economy, electricity. If Eskom collapses the whole South African economy is down,” he said.

He said that the partner would be brought in with a vision of making SAA an asset.

“There’s a whole range of things, for starters, you try and transform it and bring an experienced partner to transform it into a viable asset and then you can sell it.

“You need a reliable [company], in my view, somebody who’s got cash, a reliable airline and so on. [It would be] someone who already owns an airline,” said Godongwana.

The government is also considering merging SAA with another state-owned airline, SA Express, that’s not performing well.

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