State-owned enterprises (SOEs) that are bleeding money could see some restructuring ahead, according to the 2013 Budget, tabled by Finance Minister Pravin Gordhan on Wednesday.
These include the cash-strapped SA Airways (SAA), SA Broadcasting Corporation, SA Xpress, Denel and the SA Post Office.
“During 2011/12, (the) Airports Company [of South Africa] and Eskom recorded profits, but SAA, Alexkor and Armscor lost money.”
The losses have been attributed to policy uncertainty, costs associated with non-commercial activities, operational inefficiencies and management instability.
Government, as the main shareholder in SOEs, as well as the company boards, were not co-ordinating adequately.
“Over time, the equity of entities that persistently lose money is gradually eroded, which eventually requires that they be recapitalised.”
This meant government would have to work with the entities to develop turnaround strategies, which would include “some form of restructuring”.
SAA has been mired in controversy for years, following bailouts by government, as well as the hiring, firing and resignation of CEOs and board members.
Treasury granted the loss-making company a R5 billion guarantee in October last year, enabling it to borrow money to buy new aircraft.
This was preceded by the resignation of some board members, including chairwoman Cheryl Carolus.
Earlier this year, acting CEO Vuyisile Kona was suspended after the troubled airline’s board cited “allegations” it was investigating.