According to the Department of Public Enterprises, this R5 billion bailout will be the final financial hand-out afforded to the ailing national carrier.
South African Airways (SAA) will receive yet another exorbitant government bailout in order to keep it afloat.
But, according to the Department of Public Enterprises, this R5 billion bailout will be the final financial hand-out afforded to the ailing national carrier. This was reported by EWN, which cites statements made by Finance Minister Tito Mboweni, during his mid-term budget speech.
Finance Minister says SAA should be shut down
Last week, Mboweni said that SAA should be shut down because of a series of catastrophic financial failures which made it almost impossible to resuscitate. The Finance Minister added that it was unlikely that the national carrier could secure any private investment due to its dubious history of mismanagement and nepotism. Mboweni said:
“Why I say close it [SAA] down is because it’s unlikely that you are going to find any private sector equity partner who will come join this asset.”
His remarks garnered mixed reactions; opposition parties were generally in agreement with the Finance Minister, barring the Economic Freedom Fighters (EFF), which blasted Mobweni’s statements as ‘reactionary’. The South African taxpayer, who has long had to foot the bill for SAA’s misgivings, is unlikely to shed a tear over Mobweni’s call for airline’s closure.
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Government can no longer afford to carry SAA
Adrian Lackay, the spokesperson for the Ministry of Public Enterprises, has echoed the sentiment shared by Mboweni. While the department has approved a R5 billion bailout from National Treasury – which is due to be implemented immediately in an attempt to stave off complete collapse – Lackey confirmed that this would be the final straw.
According to Ministry of Public Enterprises, it was now, quite literally, do or die for SAA. Lackey explained:
“If we look at the Medium-Term Budget Policy Statement, it is clear that the fiscus is no longer either willing or able to extend further bailouts to the national carrier.”
The Department blasted SAA for failing to root out corruption and mismanagement; corporate ills which have plunged the state owned enterprise further into financial and operational malaise. Lackey added that Minister Pravin Gordhan would be issuing SAA’s board with an ultimatum, regarding renewed management policies and regenerative reforms. Lackay said:
“The minister would want to see greater urgency from management and the board to indicate what interventions can be implemented immediately to try and bring the airline back to operational and financial sustainability.”
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