SAA needs more support from government to stay alive – CEO

In an interview with the City Press, SAA CEO Vuyani Jarana said that the struggling state-owned airline requires bold action from the government in order for its turnaround plan to succeed.

Jarana said that while the government support and a R5-billion bailout have helped, a bold stance is required to make the airline work.

“This is not our asset. It is a state asset and we are just the stewards trying to make it work for the state,” Jarana said.

“To the extent that we are seen to be good stewards, we need the government’s backing and support.”

The South African government has considered bringing in a private equity partner to help rescue the floundering airline, but Jarana said SAA is not ready for this as it would first need to restructure its portfolio to meet the demands of the market.

Jarana added that the idea of a strategic equity partner is important, though, as it would bring certainty about the airline’s future.

Despite the problem of liquidity and funding, Jarana said he was confident about the turnaround plan for SAA and was only worried about the limited timeline the enterprise has for potential recovery.

“What keeps me awake at night is not whether we are going to make it work, but rather the pace we need to make it work.”

Airline experts disagree, however, and have stated that SAA will continue to be a massive drain on the South African economy.

Calls have been made for it to be privatised, or for its assets to be sold.

The drain of state-owned enterprises

State-owned enterprises like SAA have become the biggest risk to the South African economy, with both SAA and Eskom struggling to escape from dire financial situations.

It has become so bad that ratings agencies like Standard & Poor’s pointed to SOEs as a major reason for the downgrade of South Africa’s credit rating.

While the government is working to save these companies, the drain they place on the economy is substantial.

SAA’s most recent financial results showed that it incurred a R5.6-billion loss for the year ended March 2017, almost R3 billion more than it had initially predicted.

Now read: SAA launches new cheque card

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SAA needs more support from government to stay alive – CEO