Does South Africa need SAA?

Mmusi Maimane says the airline has become something of a bottomless pit


There is an ongoing debate about whether or not a country should own an airline. Many countries do so for national pride. Like many, I am proud of SAA as a national carrier. It is one of the oldest airlines in the world still operating. But it is simply wrong that poor South Africans are subsidizing rich people’s flights. The answer is to retain the SAA brand and lease it to private companies who can own and manage the airline. That way, it could soon be making a positive contribution to our tax revenue. The DA’s position is that SAA must be stabilized, professionalized, and sold off as soon as practically possible.

Perhaps this will be the week our government is finally forced to concede that SAA has reached the end of the road – or shall we say runway – as a state-owned entity. Loans of R6.9 billion are due tomorrow30 September. National Treasury has yet to reveal where this enormous amount of money will come from. And this is only the most immediate, not the greatest, of our SAA-inspired headaches. Treasury has already conceded that the airline will need another R13 billion in cash injections over the next two years – and that’s under an optimistic scenario in which the airline “turns around”.

SAA has become a bottomless pit into which government continues to pour precious public resources that should be spent on lifting 30 million South Africans out of poverty. It is hard to believe that any government hoping to be re-elected would take money from the poor to subsidize travel for the rich.

For almost two decades, the airline has relied on government bailouts and guarantees for its survival. The cumulative total of bailouts since 1999 is R14.4 billion, and National Treasury is currently trying to source another R10 billion for the airline in the next 24 hours. Government has already extended R19.1 billion in guarantees - meaning that nearly R35 billion of ordinary South Africans’ hard-earned money has been dedicated to keeping SAA in ‘business’. By 2019, that number will have risen to around R50 billion – an amount which could have given a million South Africans a decent home for the first time in their lives – think how life changing that would have been.

Over the past five years, under the control of Board Chairperson Dudu Myeni, SAA has made a cumulative loss of R15.7 billion rand. Yes, R15 700 000 000. It is important for South Africans to realise that government continues to retain and protect Myeni in her position, not in spite of this cash haemorrhage, but because of it. With politically affiliated Myeni at the helm, SAA is simply a massive straw through which the political elite can suck our fiscus dry. It is no more than a mechanism for large scale theft. The fact that SAA aeroplanes still fly is simply a necessary requirement to give the looting an outward show of legitimacy.

The reality is that SAA is insolvent and bankrupt. Its fortunes will not change if we continue down the current tried, tested and failed path. It could be a profitable company but it will never be so while it is beleaguered with political interference and corruption. SAA should be put into business rescue immediately. Myeni must be removed entirely. The board must comprise only independent individuals with suitable aviation and business experience. Once SAA is returned to a healthy financial position, it should be sold off. This ought to include an employee share scheme, making a portion of shares available to SAA employees in order to empower them and give them a real stake in the company’s future successes.

Unlike Eskom, SAA is not a strategic asset. South Africa does not need a national carrier any more than it needs a national supermarket or a national car wash enterprise. And it plays no role in the developmental agenda of government – on the contrary, over the last two decades it has cost our country dearly and delivered no tangible benefits to ordinary South Africans. Yet national government is hell-bent on hanging onto it – for the opportunities it opens up for corruption.

The Public Investment Corporation, which administers the pensions of teachers, nurses, police officers and other public servants, has confirmed that they were approached by Treasury for a R6 billion bailout for SAA. That our government would even consider risking the pension funds of public servants is deplorable.

Section 195 of the Constitution stipulates that: “Public Administration must be governed by the democratic values and principles enshrined in the Constitution, including … Efficient, economic and effective use of resources … The above principles apply to … Public Enterprises.” The management of SAA has become the very antithesis of the requirements set out in the Constitution. Malusi Gigaba and Dudu Myeni, in their respective official capacities, have breached the Constitution by allowing such a staggering waste of public resources at SAA.

This week, Business Leadership South Africa (BLSA) suspended Eskom and Transnet, to put pressure on government for its flagrant looting of state owned enterprises. We must all join BLSA in rejecting and condemning government corruption, and the best way to do this is at the ballot box.

Mmusi Maimane

DA Leader