Gigaba must privatise SAA: DA

By Drum Digital
08 October 2012

Public Enterprises Minister Malusi Gigaba must consider privatising SA Airways (SAA) to prevent the airline being grounded, the DA said on Monday.

"The endemic dysfunctional nature of SAA has sapped public coffers for too long. Enough is enough," Democratic Alliance MP Natasha Michael said in a statement.

"The idea of a state-backed national carrier has flown its course and must now be grounded. Surely, privatisation is the obvious alternative."

The party's comments come in the wake of an announcement on Monday that SAA chief executive Siza Mzimela has resigned from the company.

Michael said Gigaba should meet with the DA "as a matter of urgency" to discuss privatising the airline.

"The former CEO has presided over an airline characterised by spiralling debts, operational inefficiencies, and an entrenched reliance on bailouts from the National Treasury," she said.

"These factors have finally brought the wasteful airline to its knees. The airline is now well and truly in a crisis."

She said it was "no exaggeration" that SAA could find itself grounded by the end of the year.

Gigaba's office confirmed Mzimela's resignation on Monday.

"Yes we have received the resignation. We have accepted the resignation, but it was not with immediate effect," said Gigaba's spokesman Mayihlome Tshwete.

"She will remain with us for some weeks until we find a suitable person to act in the interim."

Mzimela was appointed CEO in February 2010.

SAA spokesman Tlali Tlali could not confirm the resignation when contacted for comment.

The Business Day website BDLive reported on Monday that Mzimela had described her resignation to her staff as "not a random move".

"I have given this decision careful thought and feel that now is the best time to relinquish my position as your CEO and allow somebody else to pilot the company into the future," she was quoted as saying by the website.

Mzimela's resignation comes weeks after SAA's chairwoman Cheryl Carolus and six board members resigned.

Gigaba said he had only learnt about the mass resignation from media reports.

SAA was expected to report a R1.25 billion loss for the year ended March 31, when it holds its annual general meeting next week.

Last week, the airline won support from National Treasury after hard negotiations between it and the public enterprises department to support the airline, which according to the previous board has a debt to equity ratio of -359 percent, the website reported.

Treasury agreed to a R5 billion guarantee to enable SAA to borrow from financial markets.

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