ANC turns to private sector to save debt-heavy South African Airways
THE African National Congress South African government, allied with Communist Party, is talking to private investors in the state-owned airline to ease the burden the company puts on the national budget, Bloomberg reports
THE African National Congress South African government, allied with Communist Party, is talking to private investors in the state-owned airline to ease the burden the company puts on the national budget, Bloomberg reports.
'I am pleased to learn that there are conversations involving South African Airways and potential equity partners, which would liberate the fiscus [treasury] from this S sword of Damocles,' Finance Minister Tito Mboweni told lawmakers in Cape Town.
The government will repay loss-making S's outstanding government-guaranteed debt of ZAR9.2 billion (US$629 million) over the next three years, the National Treasury said.
Lenders are demanding a firm repayment plan as a condition for agreeing to extend more funding, S said. The airline is one of several state-owned companies, including power utility Eskom Holdings, the South African Broadcasting Corporation and state arms manufacturer Denel SOC that are experiencing poor finances after years of mismanagement and alleged corruption.
A combination of bailouts for government firms, declining economic growth and falling tax revenue will cause the budget deficit to widen to 5.9 per cent of GDP in the current fiscal year.
Identifying an equity partner to invest in S has been proposed in the past, though no buyer has come forward. Ethiopian Airlines CEO Tewolde Gebre Mariam said earlier this month his airline would consider taking a stake.
'We're beginning to explore what is possible, but we have to get S back of its feet first for somebody to be interested in marrying it,' said Public Enterprises Minister Pravin Gordhan.