Restructured flag carrier SAA must be independently sustainable, says Ramaphosa

State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.
State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.

A restructured SAA cannot rely on government for further funding, President Cyril Ramaphosa has said. 

"In the interests of South Africa’s aviation industry and our economy, it is essential that a future restructured airline is commercially and operationally sustainable and not dependent on further government funding," he said during his State of the Nation Address on Thursday.  

A week ago the president said that the state did not agree with plans to slash the number of routes flown by embattled flag-carrier. Before departing for Ethiopia last week, he said the state needed to sit down with the airline's business rescue practitioners to discuss the route cuts. 

But on Thursday his only reference to the practitioners was to say that they were "expected to unveil their plans for restructuring the airline in the next few weeks".

He added that the "extent of capture, corruption and mismanagement in SOEs is best demonstrated at South Africans Airways, which was placed in business rescue late last year".

SAA was placed under voluntary business rescue in early December following years of losses and billions of rands in state bailouts.

The practitioners, Siviwe Dongwana and Les Matuson, announced the cancellation of all of the airline's domestic routes apart from the popular Johannesburg-Cape Town flight early in February. A number of international and regional routes were also cut. They practitioners said the cuts were aimed at supporting SAA's transformation into a sustainable and profitable business, and were required to conserve cash.

The practitioners defended the route cancellations in the wake of Ramaphosa's remarks. 

The Johannesburg High Court, meanwhile, ruled last week Thursday that SA Express - a state-owned airline which is distinct from SAA - be placed under into business rescue. SA Express has said it intends to appeal the ruling. 

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