South Africa’s finance minister said the nation’s troubled flag-carrier should be shut down, casting doubt on President Cyril Ramaphosa’s stated goal of saving what was once Africa’s biggest airline.
South African Airways “is lossmaking, it’s unlikely to sort out the situation, in my view we should close it down”, said Tito Mboweni, an outspoken former central bank governor, at an event with investors in New York on Thursday.
The closure of SAA would be a powerful admission by Mr Ramaphosa’s government that it cannot save one of South Africa’s highly indebted state-owned companies, which are critical to the economy. Since coming to power Mr Ramaphosa has promised to revive several state-owned groups that were beset by alleged waste and corruption during the presidency of Jacob Zuma.
SAA has not turned a profit for years and has needed R30bn ($2bn) of bailouts over the last half-decade to stay in the air — even as other African state-owned airlines such as Ethiopian Airlines and RwandAir have overhauled operations. SAA’s decline accelerated under the chairmanship of Dudu Myeni, a friend of Mr Zuma who was accused by opposition parties of running SAA as a personal fiefdom to dispense political favours.
Under the turnround plan SAA is asking the state to provide more than R21bn in equity and debt refinancing, and to tolerate another three years of losses while it cuts costs and staff. Its longer-term goal is to convince a big foreign investor, such as another airline, to recapitalise SAA. But on Thursday Mr Mboweni said: “It is unlikely that you are going to find any private sector equity partner who will come join this asset.”