As Debt Woes Deepen, SAA Has Opted To Sell Some Of Its Assets
Crisis-stricken South African Airways (SAA), the flag carrier airline of South Africa will have a portion of its assets sold to private companies, ANC made the decision during its national executive committee (NEC) meeting which took place last week.
SAA has opted to sell off some assets after banks declined to loan the state entity more money despite its debt spiraling.
Reports indicate that in earlier discussions, it was proposed that the whole of SAA be sold but the suggestions were later quashed after it was realized that there is a chance no one would buy the airline given the poor financial state.
“The person you are going to sell SAA to, you will have to give them money, not them giving you money, which is a loss,” said ANC economic head Enoch Godongwana.
He highlighted that there is a possibility that the fleets operating under SAA could be leased and not owned by the airline. SAA woes have been largely due to mismanagement and corruption by people who ran the airline.
In order to beat the profitability threshold, SAA requires approximately ZAR 22 Bn and as it stands, the government entity has received slightly above ZAR 10 Bn this year and last year.
In an attempt to raise funding which it direly needs, ANC has decided to look at international airline carriers to buy a portion of the debt-ridden airline.
“Yes, we are looking at international. You are not going to change SAA by simply saying you are going to bring somebody next door. You need cash, you need skills,” said Godongwana.
He further disclosed that the next step may be to identify an international airline that is doing well which could come in as a partner.
SAA just like other SOEs has been dependent on government handouts to stay afloat.
But due to the extent of their financial difficulties, the bailout has not helped to rebuild the company back to its feet.
Not long ago, SAA secured a sizable capital injection from the government. A bigger chunk of the bailout will be channeled towards working capital. Even after the latest bailout, the airline’s debt problem still remains as it still owes its creditors about ZAR 17 Bn.
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