The Development Bank bailout to South African Airways (SAA) of R3.5 billion could be depleted as early as next month.
This was according to the minister of public enterprises, Pravin Gordhan, who was addressing the Parliamentary Standing Committee on Public Accounts (SCOPA) and Parliament’s Portfolio Committee on Public Enterprises.
SAA was placed into business rescue in December following years of mismanagement and alleged corruption at the national carrier. The bailout from the Development Bank was advanced in early January, followed by some radical cost-cutting. All domestic routes – except for Johannesburg-Cape Town – were cut and a large number of regional and international routes were also slashed.
Gordhan also admitted that SAA was almost unsalvageable. He said that it would be very difficult to find a buyer for the airline and that somebody would have to be paid to take on the asset.
Despite it being clear that the government should rid itself of SAA a number of senior government and governing party officials seem hellbent on retaining it. This likely means that there will be additional bailouts for the failing business, money which could be more productively spent in other areas.