South African President Jacob Zuma ruled out selling South African Airways (SAA), saying the government would never sell the money-losing national flag carrier.
Many of South Africa’s 300-odd state-owned companies, including SAA, are a drain on the government’s finances and a team commissioned by Zuma to review them has recommended that some companies should be sold.
SAA has been surviving on state-guaranteed loans and asked the Treasury to extend more guarantees after it used up more than 85 percent of the ZAR14.4 billion rand (USD$965.50 million) in loans already guaranteed by January this year.
“The government is very clear, we will never sell this company, no matter what other people say,” Zuma said at SAA’s offices in Kempton Park, near Johannesburg. “I believe we can turn it around. This is one of the prides of the country, we cannot allow it to wobble.”
Finance Minister Pravin Gordhan has said the government was considering selling a minority stake in SAA.
The carrier is in the middle of a turnaround strategy led by Gordhan that will include appointing a new board and chief executive and cutting costs and cancelling loss-making routes.
Last year, it cancelled unprofitable routes to Beijing and Mumbai but Zuma told cheering and clapping SAA staff on Friday that the airline’s board should be thinking about adding routes rather cancelling them.
“Once I see a flag at the tail of an SAA (plane), I always have the feeling that: ‘Man, we are here, we have arrived'” he said. “Therefore, I wouldn’t understand any notion that will say this company must be reduced or its capacity must be reduced. It must be expanded.”
(Reuters)
