FINANCE Minister Nhlanhla Nene has quashed speculation that South African Airways (SAA) is in talks that could result in the national carrier acquiring an equity partner.
There has been speculation that the financially troubled and cash-strapped national airline might seek out an equity partner to alleviate its woes and reduce its dependence on state guarantees.
Former acting SAA CE Nico Bezuidenhout was particularly vocal about the carrier seeking a strategic equity partner.
During his recent tenure, Mr Bezuidenhout said talks were under way with Etihad Airways but nothing had materialised.
The sale of stakes in SAA Technical and Air Chefs has also been considered.
SAA is kept going on the basis of state guarantees amounting to R14.5bn and has embarked on a stringent cost-cutting programme to trim losses.
In a written reply to a parliamentary question by Democratic Alliance spokeswoman on public enterprises Natasha Mazzone, Mr Nene said SAA was not in talks over equity stakes with Air China or any other airline.
SAA entered into a code share agreement with Etihad in 2013, a deal that gives both airlines mutual and greater access to the Middle East and the rest of Africa.
Mr Nene said in his reply that SAA flights to Abu Dhabi were envisaged as the third phase of this code share agreement.
One of the benefits of flying to Abu Dhabi, he said, was that it would provide multiple connectivity options for SAA passengers to the Middle East, mainland China and India.
This would also enable the closure of the loss-making Beijing and Mumbai operations. The Beijing route alone cost SAA R30m a month in losses.
However, Mr Nene noted that SAA was expected to make losses on the Abu Dhabi route in the first two years of the operation, "which was not unusual for a new long-haul route".
Government oversight of SAA was transferred from the Department of Public Enterprises to the Treasury at the end of last year, so that the airline could address its financial problems.
The airline is engaged in a drive to contain costs and has plans to cut staff by about 10.5%.
The cost-cutting plan aims to save R2.2bn in the next three years, in addition to the 17% unit cost reduction achieved over the past three years.
According to the airline’s corporate plan, the savings, if achieved, would ensure a R1.3bn improvement in earnings before interest, tax, depreciation and amortisation in the 2015-16 financial year; as well as positive earnings before interest and tax in the 2017-18 financial year.
SAA sustained a R2.6bn loss last year, compared with a R1.2bn loss in 2012-13.
Last year’s loss was on a total income of R30bn, compared with R27bn in the previous year.
Since Mr Bezuidenhout’s departure, the airline is being run by its human resources GM, Thuli Mpshe, on a temporary basis.
