by SAVIOUS KWINIKA
JOHANNESBURG – THE main opposition Democratic Alliance (DA) has advised against the bailing out of the South African Airways (SAA), ahead of Finance Minister, Tito Mboweni, presenting his Budget Speech on Wednesday.
DA argues the national airliner must not be bailed out as private carriers will feel the void should it be left by SAA.
Alf Lees, the opposition party’s Shadow Deputy Minister of Finance, stated extending bailouts to SAA had become a huge liability for taxpayers.
“In the first place there is no logical reason for SAA to be in business at all. The national carrier is still clearly cursed by maladministration and corruption, is over-staffed and bankrupt,” Lees said.
“South Africa is itself so heavily in debt that it simply does not have the money to continue bailouts of SOE’s (State Owned Enterprises) such as South African Airways,” Lees added.
He argued it was better for the national air carrier to shut down business and pave way for privately owned flights that would easily fill the gap.
“Finally, there are private airlines that have no drain on taxpayers’ funds that are ready and able to immediately fill any gaps that may arise if SAA were to be shut down,” Lees said.
SAA is widely believed to be owing creditors debt more than R20 billion, a move the DA argues was negatively impacting on taxpayers’ money.
Lees thus argues Mboweni should not give SAA additional bailouts.
SAA’s fortunes are in stark contrast to Africa’s largest air carrier, Ethiopia Airways.
It runs business independently and has been generating profits without government aid as opposed to SAA that year-on-year-on receives billions in order to operate.
This past weekend, SAA reached an out-of-court settlement with privately-owned Comair following a protracted legal battle.
The legal dispute between the two airlines related to commissions paid to various travel agents between April 2000 and May 2001 as well as between June 2001 and March 2005.
These were found to be prohibited and in contravention of the Competition Act, following which Comair sued SAA for damages.
“SAA is on track in implementing its turnaround strategy, it is making good progress and has already met a number of targets it has set in the implementation path,” SAA spokesman, Tlali Tlali, said.
– CAJ News