South African Airways (SAA) continues to face financial difficulties despite several government attempts to turn around its fortunes. Therefore, the National Chairperson of the African National Congress Geese Mantashe has recently called for the government to sell the state-owned flag carrier.
Cash flow concerns
South African tech news site MyBroadband reports on how the ANC chairperson and energy minister feels that the firm does not cater for the working class of the country, despite the amount of money the state pumps into it.
“If it is always asking for money and it does not fly the working class but only elites… [subsidising them] is not subsidising the working class,” Mantashe said.
“The only ones who are ferrying the working class are the buses and the taxis. If we were giving this money to the buses, taxis, and trains, you would have a case.”
The politician continued on to state that the government can’t continue to throw money at the airline every month. He is frustrated that R3.2 billion (US$212 million) was given to the airline in December, even though it is still severely struggling. Mantashe states that in order to survive, it must make money. Therefore, a businessperson should take it on to steer it in the right direction.
Earlier this week, SAA shared that, as part of its restructuring plan, it will have to cut various routes. Along with this, it is continuing with its plan to sell several Airbus A340 aircraft as part of its fleet modernization.
All the money-saving initiatives and cash injections put in place haven’t seemed to put the airline back on track. Therefore, a sale could be a viable solution for the struggling firm. It is currently losing out on customers from several routes. If the situation doesn’t change, even more flights could be cut, further reducing the amount of revenue.
If there is no overhaul, the airline could be stripped to its bare bones while no change in fortune is achieved. Just like how South Africa’s government is struggling with its national carrier, the government of India is also finding it tough to handle Air India’s financials.
The state has been talking with several companies to take the company off its books. Most recently, the Tata-Singapore Airlines group has expressed its interest in the operator.
However, President Cyril Ramaphosa has a different view from Mantashe when it comes to SAA’s ownership. He believes the airline is an economic enabler and is eager for it to remain a successful carrier for the country. He is determined not to close the firm down but wants it to be revamped to regain profitability. Nonetheless, a huge change is needed for the airline to return to the heights that Ramaphosa wants it to reach.
It’s understandable that the government would want to keep control of one of its key assets. However, the right decision needs to be made to ensure that the operator survives. At this point, it seems to be more of a liability than an asset.
Do you think South African Airways could be sold? Let us know what your thoughts are in the comment section.
Simple Flying reached out to South African Airways for comment on its situation but did not hear back before publication. We will update the article with any further announcements.