South Africa 28.6.2018 08:50 am

Loss-making SAA should be closed down – think tank

A South African Airways Airbus A320 lands on runway 03R at OR Tambo International Airport in Kempton Park, 22 September 2016. Picture: Neil McCartney

A South African Airways Airbus A320 lands on runway 03R at OR Tambo International Airport in Kempton Park, 22 September 2016. Picture: Neil McCartney

However, the think tank says careful thought and consideration should be given to employees.

South African Airways (SAA) is a massive drain on the fiscus, and should be closed down, albeit with careful thought and consideration for employees, think tank Free Market Foundation said on Thursday.

South African Airways needs R9.2 billion just to pay off loans and R15 billion to fund daily operations, and its local share of the domestic and international market has fallen from 95 percent in 1994 to 23 percent and 17 percent respectively, FMF director Temba Nolutshungu said.

“Some say a national carrier is needed to carry the brand of the country,” he said.

“But is a failed airline, sucking billions in diverted resources from the poor and the taxpayers, really a brand to promote for national excellence and to carry our national pride? Simply no.”

Nolutshungu said while the potential loss of 10 100 jobs at SAA should not be taken lightly, the jobs came at a cost of R6.1 billion a year for the national carrier.

“SAA should pay loyal staff a very generous retrenchment package, more than is the norm, and spend money on training and development to create a true set of transferable skills for current employees,” he said.

“It may seem extravagant, but a generous retrenchment package of 6 – 12 months would save South Africa billions over the next 3 to 5 years. The R15 billion SAA is demanding would more than cover this with much left over to wind down SAA in a responsible manner including the reskilling of all retrenched employees.”

The FMF is a nonprofit organisation, created in 1975 to promote free-market practices, which it says would help create a “nonracial, free and prosperous South Africa”.

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