International flights may be cut as minister wrestles with carrier's financial woes

Barely six months into her job as public enterprises minister, Lynne Brown is taking tough measures in her bid to stop South African Airways's dependency on state bailouts.

"The airline will have to learn to live off its balance sheet. We simply cannot continue to have the national fiscus coughing up bailouts all the time," Brown said on Friday.

She has vowed to abolish international flight routes if it will help heal the ailing national carrier.

"If I have to cut routes, I will. It cannot be business as usual. The airline has to become sustainable. We are assessing the sustainability of routes, and will announce the findings soon," she said.

Citing reasons of commercial competitiveness, she did not want to identify specific routes, but it is well known that routes to London and Beijing were among SAA's major loss-making ones.

The Beijing route, SAA's longest flight, is rumoured to be losing R300-million a year, but is known to be close to the hearts of those who relish South Africa's cosy relationship with China for political reasons.

"SAA is too much of a national asset to play around with. Fiddling around the edges will not do; it cannot be business as usual.

"The airline is under-capitalised and has various non-profitable routes - not so much the domestic or African ones as the long-haul international routes. And yes, to pre-empt any questions, the Beijing route will have to be looked at as well.

"Both the financial and business models will have to be relooked. Should SAA and SA Express not maybe change the model in which they operate?" asked Brown.

She said the government review of the funding of state-owned enterprises, including Eskom, will be reflected in Finance Minister Nhlanhla Nene's medium- term budget policy statement, to be delivered in parliament on Wednesday.

Regarding the general state of state entities, Brown said SAA and SA Express were the biggest headaches.

"Eskom has had a big bail-out. Denel has largely turned itself around - it has about R30-billion in orders. Safcol and Alexkor are not in massive difficulties although they could do better. I am meeting with Alexkor next week. We need to accept that their operations are situated in a part of the country where carat yield is diminishing."

Asked whether privatisation or partial privatisation was on the table, Brown said privatising SAA was not an option, but that change was a non-negotiable.

"At this stage, I am more convinced than ever that a different business and financial model is necessary."

However, Brown said while state-owned entities cannot be bailed out all the time, privatisation was not on the table. Instead, Brown said, "strategic partnerships" were.

About suggestions that National Treasury get a greater say, Brown said Treasury and the Department of Public Enterprises recently started working together in an inter-ministerial committee, pooling top experts.

She was confident that her proposed drastic measures had the backing from government, the presidency and the ANC's economic transformation committee.