ANALYSIS: SAA's collapse going according to plan for Ramaphosa

2019-12-05 11:20
President Cyril Ramaphosa (Getty Images)

President Cyril Ramaphosa (Getty Images)

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Developments at SAA, the country's withering national carrier, seem to be going according to plan for President Cyril Ramaphosa.

The decision to put SAA under voluntary business rescue creates distance between the president and the inevitable trauma that surely lays ahead at one of the world's oldest airlines.

Ramaphosa has consistently failed to take the difficult decisions and own the consequences since taking office in February last year. Since his ascension to the top job at the Union Buildings, there have been a series of warnings about the precarious fiscal position of the national finances, how the country got there and what needs to be done.

READ | SAA in business rescue: What it means and its odds for survival

The National Treasury, SA Reserve Bank, ratings agencies, big business, think-tanks and academics have implored Ramaphosa and his government at every opportunity to make incisive changes and deep cuts in order to stabilise finances and restore economic health.

The proposed changes and cuts are the function of years of corruption, mismanagement and neglect and could not be put off any longer. It is the function of the ANC, and Ramaphosa must deal with it.

SAA is going to be the first casualty of a broad and extensive economic and fiscal recovery as well as a restoration process. The best outcome will be a drastic restructuring of the airline, with the loss of jobs, selling and liquidation of some parts of the SAA group as well as the introduction of an equity partner. All of which are anathema to ANC dogma, and have been fiercely resisted for years.

The appointment of a business rescue practitioner gives the president plausible deniability. He can tell both the ANC and the party's allies in the unions that the government tried its best, but that the dire state of SAA's finances left the company's board with no other option but to apply for business rescue.

And a proper business rescue practitioner will not be swayed by internecine alliance politics, ANC faction fighting, kickbacks and patronage.

READ | Business rescue and SAA: A last lifeline before liquidation


The BRP - as the practitioners are referred to - will look at the balance sheet, debt levels, efficiencies and prospects, and chart a way forward. And, according to the law, without the interference of the shareholders or management. Which means someone who is not the government, deployed cadres or anyone else with vested interests will be taking an axe to SAA Corporate Park.

The bloodletting and trauma will lead to political fallout at Luthuli House and in the broader alliance. Ramaphosa, however, will now be able to say the matter is out of his hands. Decisions about what to do at SAA, after all, will now be taken by someone else.

Tito Mboweni, the immovable minister of finance, will no doubt be having a chuckle in the background. He has been a vociferous critic of SAA, using his first official appearance as finance minister in October last year to question the need and viability of a government-supported national airline.

His statements on economic reform were severely criticised by cadres, most notably Deputy President David Mabuza (whose tenure as premier of Mpumalanga is pockmarked by financial mismanagement). In the end, it was he who drew the line in the sand and refused to grant SAA further guarantees or consider loans.

Repairing the damage of years of capture will be painful. SAA is going to be the first big test case.

And Ramaphosa will be able to claim victory, or ignorance, either way.

Read more on:    saa  |  tito mboweni  |  gordhan  |  ramaphosa  |  pravin gordhan  |  cyril  |  business rescue
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