Give SAA a year or two to recover — Gordhan
South African Airways (SAA) is making financial improvements, Public Enterprises Minister Pravin Gordhan said.
The minister was answering questions in Parliament, about whether strategic equity partners should be brought in to help support struggling state-owned enterprises (SOEs).
Responding to a question from IFP MP Narend Singh about SAA’s road to recovery, Gordhan said the national carrier should be given “another year or two” to recover.
“There are aspects improving, financially speaking,” Gordhan said of the airline. Some routes are returning to profitability, he added.
Gordhan said the future of SAA and other SOEs will be determined by the next administration, following elections on May 8.
But he stressed that government must consider what is in the best interest of the country.
If disposing state assets would run into millions of costs or if bringing on a strategic equity partner would not add value to the SOE at all, then it would not be in the best interest of the country, he explained.
He agreed with previous statements made by Finance Minister Tito Mboweni that government must monitor boards of SOEs and management to ensure that they deliver on the developmental mandate.
Strategic equity partnerships not privatisation
Speaking broadly on the introduction of strategic equity partners to provide assistance to SOEs struggling to raise funds through traditional means such as capital markets, banks, development finance institutions and the fiscus, Gordhan said that in turn SOEs must also offer these partners a value proposition.
For example, SAA will get a strategic equity partner once it has effected its turnaround plan and established profitability and viability.
Apart from providing financial support, strategic equity partners can also enhance SOEs with new technology and strengthen management of entities. Gordhan said that strategic equity partnerships will be introduced to SOEs on a case-by-case basis.
He clarified that the introduction of a strategic equity partner is not the equivalent of privatisation.
Gordhan also affirmed that government would not dispose of strategic assets for the wellbeing of the economy and the people of SA.
“Privatisation is not on the agenda,” he said. — Fin24