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No decision yet on equity partner for SAA, says Gigaba

May 10 2017 18:44
Liesl Peyper

Cape Town – The government has not taken a decision yet whether an equity partner will become a shareholder of SAA, said Finance Minister Malusi Gigaba on Wednesday.

Gigaba fielded questions from members of Parliament for the first time since his appointment to the National Treasury on 31 March this year.

Alf Lees from the DA asked Gigaba if SAA intends to continue with the sale of a part of the airline to private equity partners.

Gigaba pointed out that it is not to say that the equity partner will necessary be from the private sector. “It may also be a public equity,” he said.

Former finance minister Pravin Gordhan first alluded to the possibility of a minority equity partner for SAA in his 2016 Budget.

Since then the international firm Bain & Company has been appointed to assess all options before making a decision on the matter, Gigaba said.

This includes SAA’s long-term turnaround strategy and a possible merger between SAA and SA Express.
 
Lees asked in a follow-up question if National Treasury will grant yet another bailout to SAA, which will have incurred financial losses to the tune of R4.5bn in the current financial year.

Gigaba acknowledged that the continuous losses at SAA and its balance sheet need to be addressed urgently.

“National Treasury is paying attention to this on a daily basis to bring SAA back to financial health and make it sustainable again. But there’s no magic wand. We can’t say if a part of SAA is privatised or when it is sold to a minority equity partner all the problems will be resolved.”

In a follow-up question, the IFP’s Mkhuleko Hlengwa asked Gigaba if he’d consider rationalising SAA’s operations to cut costs. “Let’s drop the unprofitable routes and look where SAA can make money.”

Gigaba responded that the rationalisation of SAA’s operations are ongoing.

“We’re reconsidering the domestic, international and regional routes,” Gigaba said, “including the issue of the cost of fuel and the procurement of a number of items.”

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