South Africa resists call for more airline funds with jets idle

by Bloomberg Feb 24, 2021

South Africa resisted adding yet more billions of rand to its ongoing bailout of the country’s bankrupt national airline, sticking to the idea that a private partner can be brought in to salvage the carrier.

Administrators for South African Airways have asked for 3.5 billion rand ($239 million) more in state funding than was allocated in October, according to the country’s Budget Review presented on Wednesday. A further 5.3 billion rand is being sought from outside entities, according to the document.

Yet no further cash was put aside for the carrier by Finance Minister Tito Mboweni. Any reports that more funding will be provided are “speculative,” he told reporters in an online briefing after presenting the plan to lawmakers in Cape Town.

The government’s repeated bailouts of SAA have long been controversial, given the country’s economic difficulties and precarious finances. The issue has become even more emotive given travel curbs caused by the Covid-19 pandemic, which have seen the airline’s fleet grounded since March 2020 and showing little sign of an imminent return to the skies.

Private Savior

Even healthy carriers are expected to struggle for a second consecutive year, with industry body IATA reporting Wednesday the industry could burn through $95 billion in 2021—double the previous forecast. The identification of a new coronavirus variant in South Africa has seen the country placed on many travel blacklists, further limiting SAA’s revival hopes.

South Africa’s government has pinned its hopes on the emergence of a private-sector savior, with Public Enterprises Minister Pravin Gordhan saying this month there are three potential candidates and one will be selected in about a month.

The ruling African National Congress is “open to suggestions of a private-equity partner in SAA and that government need not even hold a majority stake,” Paul Mashatile, the party’s Treasurer General, said in an interview. “I am not wedded to the notion of a state-owned airline.”