SAA seeks to allay shutdown fears

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Cash-strapped national carrier South African Airways on Sunday assured customers and suppliers that it would not be “shut down or sold”.

The statement comes after the Minister of Finance, Tito Mboweni, recently suggested that shutting down the state-owned airline would be the best option.

In a statement SAA said it would like to “assure all its stakeholders, customers and suppliers of business continuity after government clarified its position that the airline will not be shut down or sold.”

The airline has been a recipient of numerous government guarantees.

Answering question in Parliament last week, President Cyril Ramaphosa, said  SAA was “laden with debt” and the country “would not be able to get any value for it,"  if it was to be sold.

The airline said it welcomed Ramaphosa’s assurances that it would remain in business and that government was “considering various options, which include the possibility of an equity partner.”

“SAA’s strategy implementation is on track and there are ‘green shoots’ that indicate positive results on initiatives already implemented, particularly in the airline’s route network.”

The debt SAA carries is significant and underwritten by government. Treasury recently allocated R5bn to SAA to stabilise its debt, R14.2bn of which is due in March 2019.  

Plans to turn around the flag carrier included the implementation of capacity adjustment in the domestic market and network optimization in the regional and international markets. Bloomberg, meanwhile, reported earlier in the week that SAA was considering selling shares to end years of losses and reduce the need for bailouts.

“The airline’s position is that it will take three years to bring the company to a break-even position,” said the statement.

SAA is also said to consider a resumption of flights to Abuja, the Nigerian capital, which it abandoned in 2017.

Leadership instability at the airline has also contributed to its operational challenges. It appointed a new board in October 2017, with Vuyani Jarana replacing Dudu Myeni as CEO.

“There is every resolve to address long-standing legacy issues, to improve the performance of the business, to regain its market share and to provide its customers continued and improved service,” said SAA.

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