Despite billions lent to it, SAA continues to post losses

Cape Town – Government is keeping a beady eye over state-owned companies, one specifically being South African Airways (SAA).

According to the medium-term budget policy statement, government’s “major explicit” contingent liabilities were its guarantees, which amounted to R263 billion at the end of 2015/16.

This was because several entities had not fully used their available guarantees.

For the embattled and virtually insolvent SAA, government had injected a further R19 billion guarantee to ensure it could operate and make a profit. So far it has only used R14 billion but the national carrier continues to post losses.

Government has come under fierce criticism over its decision to reappoint President Jacob Zuma’s alleged friend Dudu Myeni to the helm of the board.

In the last financial year SAA posted a loss of R1.5 billion.

The vacant seats on the board have now been filled and it is at full strength.

Director-general Lungisa Fuzile said Treasury had considered the guarantee and was confident the board and a team of competent executives could turn the airline’s poor performance around.

“We wouldn’t want to throw good money after bad. We can’t just give money without getting the assurance … government wouldn’t give money to an entity without having a sense that there is a strong effort made within the entity to fix a whole list of things.”

Finding a strategic partner was still an option that could be considered if the airline continued to  perform poorly, he said.