South African Airways (SAA) is in a state of uncertainty at the moment. The national airline for South Africa was put into Business Rescue earlier this year after facing insurmountable financial troubles over the past few years. COVID-19 undoubtedly made the airline’s problems worse. There is one key name that continues to appear in any news related to the airline’s restructuring and recovery: Pravin Gordhan. This article will take a look at his role as South Africa’s Minister for Public Enterprises and how he could dictate the future of SAA.
Who is Pravin Gordhan?
Pravin Gordhan currently sits as South Africa’s Minister for Public Enterprises. His role is considered by some to be key to a new or revitalized SAA.
Gordhan, 71, is no stranger to adversity. According to Bloomberg, he was imprisoned and tortured for his role in the struggle against apartheid. Once released, Gordhan took a role in the government, raising South Africa’s revenue collection as head of the tax service, twice serving as finance minister. More recently, serving alongside former President Jacob Zuma, Gordhan opposed attempts to interfere with the tax-collection service and embarked on a ‘costly’ nuclear power program.
With regard to SAA, Gordhan has been at odds with the airline’s Business Rescue practitioners (administrators), Siviwe Dongwana and Les Matuson. He accused the pair of wasting money and lacking transparency. Dongwana and Matuson have sought a combination of extensions and additional funding as they are under pressure to put together a proper plan for Business Rescue.
Bloomberg reports that Gordhan wants to see a viable airline not reliant on state funding, while saving as many jobs as possible. The administrators were looking to make sharp cuts to the airline’s workforce possibly leading to its liquidation.
SAA necessary for South Africa
Gordhan believes that a national airline is in the best interests of the country and is insistent that a solid investor can be secured. According to Live and Lets Fly, the search for an investor is going to be a difficult process given the global aviation climate.
South African law limits foreign ownership to 25%. What’s more, there are plenty of domestic issues that a new investor would have to deal with, such as the government’s intent to exercise “some degree of control” over the new or reconstituted airline.
As we reported yesterday, Gordhan is dead set against liquidation of SAA:
“Winding down is not an option. The purpose of providing R5.5 billion post business rescue commencement funding was to complete the business rescue process, which must end with a cost-effective and streamlined airline.”Advertisement:
Speaking with Bloomberg, Ralph Mathekga, a South African political analyst and author says, “It’s very strange to see Pravin Gordhan coming out as dragging his feet. I didn’t think we would be negotiating about an airline that’s already dead…I thought logic would be dictated by current circumstances.”
The Business Rescue team has until the end of the month to present a viable plan for the airline’s future. Hopefully, whatever it is, it will be something Gordhan can throw his support behind.
Can SAA find a large investor to save it? Let us know your thoughts in the comments.