South African President Jacob Zuma ruled out privatising South African Airways (SAA) yesterday, saying that the government would never sell the money-losing national flag carrier.
Many of South Africa’s 300-odd state-owned companies, including SAA, are a drain on the government’s purse and a team commissioned by Zuma to review them has recommended that some of these companies should be sold.
SAA has been surviving on state-guaranteed loans and asked the Treasury to extend more guarantees after it had used up more than 85% of the 14.4bn rand ($965.50mn) in loans already guaranteed by January this year.
Some opposition lawmakers have called for the airline to be privatised.
“The government is very clear, we will never sell this company, no matter what other people say,” Zuma said at SAA’s offices in Kempton Park, near Johannesburg. “I believe we can turn it around. This in one of the prides of the country, we cannot allow it to wobble.”
Finance Minister Pravin Gordhan has said the government was considering selling a minority stake in SAA.
The carrier is in the middle of a turnaround strategy led by Gordhan that will include appointing a new board and chief executive and cutting costs and cancelling loss-making routes.
Last year, it cancelled unprofitable routes to Beijing and Mumbai but Zuma told cheering and clapping SAA staff yesterday that the airline’s board should be thinking about adding routes rather cancelling them.
“Once I see a flag at the tail of an SAA (plane), I always have the feeling that: ‘Man, we are here, we have arrived’,” he said. “Therefore, I wouldn’t understand any notion that will say this company must be reduced or its capacity must be reduced. It must be expanded.”
The president also said that frequent power cuts in South Africa, which have hurt its economy, should no longer be a problem as state utility Eskom has beefed up electricity generation capacity to meet demand.
“I have been assured by the (Eskom) chief executive officer and the entire management that there will never be load-shedding again,” Zuma said during a visit earlier yesterday to Eskom’s headquarters.
Africa’s most industrialised country is racing to expand power supply after Eskom was forced early last year to impose almost daily power cuts as demand outstripped available capacity.