Treasury to tackle state airlines

NJR ZA via Wikimedia Commons

The possibility of merging South African Airways (SAA), South African Express and Mango or integrating them under a single holding company has been on the government's agenda for some time as a means of achieving synergies and economies of scale.

Another option to be investigated by Treasury is the separate corporatisation of the airlines' international, regional or domestic routes.

Appointment of advisers under way

Gordhan said the process of appointing advisers was under way, but budgeting issues had to be resolved first. In a written reply to a parliamentary question by DA deputy finance spokesman Alf Lees, Gordhan outlined the terms of reference for the advisers who will be tasked with developing a group structure to realign the airline assets. These assets include a 3% stake in Airlink.

The advisers will assess the following: what to do with the state's Airlink stake, and whether this should be increased or decreased; whether to establish a holding company; the corporatisation of Voyager and Cargo; the incorporation of SAA, South African Express and Mango into an integrated airline group with or without Airlink; the integration of the technical divisions of SAA, South African Express and Denel; the identification of noncore assets for disposal; the creation of a shared services division; the establishment of a separate aircraft leasing firm; separately corporatising the international, regional or domestic routes; and investment by strategic equity partners at group or subsidiary level.

Myeni defends her track record

While Gordhan resisted the reappointment of Dudu Myeni as SAA chairwoman, Myeni believes it is in the best interest of the airline and taxpayers that she serves her full term of office, not least because she is championing transformation.

She expressed her views in a letter to the chairman of Parliament's standing committee on finance, Yunus Carrim, in response to a question posed by DA finance spokesman David Maynier during a committee hearing in September. In the letter, she vigorously defended her track record, insisting she has done nothing to harm the airline, blaming past decisions for many of its woes.

"SAA's performance cannot be solely attributed to me," Myeni wrote, pointing to the fact that SAA had never been capitalised and continued to suffer from the bad decisions of the past, including that by former CEO Coleman Andrews to sell and lease back the airline's fleet. The airline had also suffered heavy hedging losses in the past and continued to do so as a result of falling global oil prices and currency movements.

Myeni bemoaned the lack of economic transformation due mainly to those "hanging on to their ill-gotten unearned privilege at the expense of the national imperatives."

"It is a serious concern that we preside over a state-owned company which continues to be dominated by one section of the society against the majority who receive crumbs from the R24bn procurement spend," she wrote.

Myeni hits out at SA pilots

"Further, I have taken a dim view of the exclusive benefits enjoyed by the pilots. None of these glaring issues have received as much as a whimper from some people.

Myeni hit out at the SAA Pilots' Association, which she said was resisting attempts to restructure their contracts, which were a significant drain on SAA's cash flow.

"The pilots are costing the SAA in excess of R600m per year in excessive guaranteed benefits," she said.

Source: Business Day