South African Airways dodges a bullet
Photo: Ray Barber / Flickr

DA: SAA must be liquidated as Cabinet approve plans for new airline

The DA have said that with Cabinet likely to dismiss BRPs plans to save SAA, they are left with little other option but to liquidate the failed airline.


South African Airways dodges a bullet
Photo: Ray Barber / Flickr

The Democratic Alliance (DA) have called for financially broken South African Airways (SAA) to finally be damned to liquidation after years of bailout efforts and business rescue procedures to revive the embattled airline have ultimately proved fruitless. 

Last week, the Department of Public Enterprises said that they would block an application to prevent the airline from being placed under provisional liquidation, and on Monday 29 June, the DA said that it is about time the move was confirmed. 

SAA bailouts ‘throwing good money at bad’

Ghaleb Cachalia, the DA’s Shadow Minister of Public Enterprises, said that the plan devised by Business Rescue Practitioners (BRPs) is likely to be rejected by stakeholders involved in the state-owned airline, and said that now is the time for SAA to ultimately be condemned to liquidation. 

“The [BRP] plan, supported by the Department of Public Enterprises (DPE), requires National Treasury to confirm that it will provide funding for the new SAA,” he said. 

“However, the spoke in the wheel of DPE and the Minister’s plans are the absence of any money set aside in Finance Minister, Tito Mboweni’s supplementary budget.”

“Add to this a breakdown of Minister Pravin Gordhan’s much touted Leadership Compact, involving labour and the DPE, and the road to liquidation, delayed in the vain hope that a new airline would emerge – with additional support from the fiscus after decades of bailouts –  now appears to be firmly on the cards.”

Cachalia said that the plethora of bailout efforts to try and keep the airline in the sky has resulted in a a catastrophic waste of public funds. 

“The DA’s call for the liquidation of the bankrupt entity which predates the many additional millions spent on BRPs, consultants and subsequent bailouts appears now to be the only responsibly practicable way forward,” he said. 

“Years of delay and throwing good money after bad could well have been avoided if the DA’s advice was heeded – still, better late than never.”

DA accuse Gordhan of clinging to state control of airline industry  

He said that the money could have been far better spent on private airlines, and accused DPE minister Pravin Gordhan of clinging to the failing airline as a means of commanding  state control over the industry. 

“Hitherto profitable private sector players in the local aviation industry that have been severely impacted by COVID-19 would be better candidates for financial support, allowing them to fill the gap, absorb and provide skills and jobs as the sector cautiously embraces a return to some normality,” he said. 

“Of course, this would remove the dead hand of state control and ownership of an airline, which accounts for Minister Gordhan and the DPE’s reluctance to let go as they oppose a diversion of support to players that have more than a fighting chance to deliver sustainability and progressively expanding services as the market reopens.”