Pravin Gordhan desperately wants to maintain a national carrier in South Africa. As South Africa’s Minister for Public Enterprises, the key to a new or revitalized airline rests in Gordhan’s hands.
One Man’s Effort To Save South African Airways
There’s still uncertainty over the future of South African Airways. Last December, SAA was placed into Business Rescue, the South African equivalent of Chapter 11 bankruptcy in the USA. Due to COVID-19, the airline is currently not operating flights. Administrators tried to fire all employees, but a labor court blocked the move. Still, employees have not been paid in weeks.
Gordhan sees a national airline as a national necessity and still believes that an investor can be found. But with airlines collectively losing around 500 million dollars per day and the South African economy hard-hit by COVID-19, this is shaping up to be a more difficult task than ever. There’s also South African law, which limits foreign ownership to 25% (not that creating a South African shell company would be an insurmountable obstacle). Plus, South Africa still wishes to exercise “some degree of control” over the new or reconstituted airline, which could be the biggest drawback to any investor. Yet Gordhan is adamant that SAA cannot simply dissolve.
“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.”
Gordhan sees the alternative as even bleaker, warning Parliament’s Standing Committee on Public Accounts (SCOPA) against a liquidation “garage sale” of SAA assets:
“We are not having a garage sale I hope, where things are taken on the cheap so to speak. We don’t want people to just pick up assets, but to pay a fair price if or when a particular asset is put on sale.”
SAA Returns Three A330s
The Business Rescue team has been given until the end of the month to present a viable plan. Whatever the plan, it is unclear at this point if the government is willing to offer any more funding. Over the weekend, three leased SAA A330s were returned to the United States. Gordhan said this is part of SAA’s contining effort to reduce maintenance and leasing costs. It also foreshadows what could be a smaller, more regional airline if it manages to survive.
Gordhan has a long history in South African politics. Once imprisoned for anti-apartheid activity, Gordhan has served as finance minister and the head of tax collection. He’s well respected in South Africa, making all the more serious his decision to stake his reputation on saving South African Airways.
But Mkhuleko Hlengwa, the SCOPA chairman, warned that patience is growing thin:
“Taxpayers cannot afford to continuously pay for something whith no end in sight. We want a timeline so we can speak from certainty and not continue on speculation. The bottom like is either you shape up or you ship out. South Africans cannot afford an airline that will bleed it dry.”