S.Africa's Treasury asks parliament to postpone state airline's results again - CNBC Africa

S.Africa's Treasury asks parliament to postpone state airline's results again

Southern Africa

by Reuters 0

S.Africa's Treasury asks parliament to postpone state airline's results again. PHOTO:

South Africa's Finance Minister Pravin Gordhan on Thursday asked parliament to push back the release of the state-owned airline's 2015 earnings report to September, the fourth such request as the treasury mulls whether to extend more guarantees to the ailing carrier.

South African Airways has been surviving on state guarantees of around 14.4 billion rand ($1.01 billion) and has asked for an additional 5 billion rand from the treasury after it used up more than 85 percent of the 14.4 billion rand in loans already guaranteed by January this year.

The carrier has been marred by controversy and financial mismanagement for years and has been singled out by ratings agencies amongst other state companies as a major risk to the country's investment grade status.

"Given the potential implication for the sovereign and for the economy the matter has required extensive and careful consideration," National Treasury said in a statement.

The government is also finalising plans to merge SAA with SA Express, and will consider a minority equity partner for the company.

Some opposition lawmakers have called for the airline to be fully privatised but President Jacob Zuma has ruled out such move.

Widely respected Nhlanhla Nene was axed as finance minister by President Jacob Zuma in December just weeks after he vetoed a plan by SAA chairwoman Dudu Myeni to amend the cost-saving deal with the French manufacturer Airbus.

The carrier is in the middle of a turnaround strategy led by Gordhan that will include appointing a new board and chief executive and cutting costs and cancelling loss-making routes.

Last year, it cancelled unprofitable routes to Beijing and Mumbai but Zuma told cheering and clapping SAA staff n May that the airline's board should be thinking about adding routes rather cancelling them.

 

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