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No more government bailouts for SAA, says Gordhan after meeting unions

19 November 2019 - 18:07 By Matthew Savides
Public enterprises minister Pravin Gordhan. File picture.
Public enterprises minister Pravin Gordhan. File picture.

The government will not be giving embattled airline SAA another bailout.

So says public enterprises minister Pravin Gordhan in a statement issued after meetings with striking unions on Tuesday afternoon.

Gordhan said the meeting between the National Union of Metalworkers of South Africa (Numsa) and the SA Cabin Crew Association (Sacca) was "an open and frank exchange of information" as the strike entered its fifth day.

"While the minister reiterated the government's commitment to saving the airline, he strongly urged the unions to work with the airline's management to find a speedy resolution to the impasse. The ultimate aim is to ensure that both jobs and the airline can be saved," he said.

Gordhan was clear that the government was "not in a position to make money available to the airline".

"The pattern of bailouts has become a moral hazard," he said.

"Over the last three years, the government has provided more than R20.5bn of fiscal support to SAA. No further financial resources can be advanced to the carrier. The government is facing severe financial constraints."

He added that restructuring SAA's business was required to return the airline to profitability.

"In addition to growing revenues, efficiencies must be improved and costs need to be reduced across the board. Savings in excess of R500m have been realised through renegotiating procurement contracts, many of which were concluded at inflated prices during the era of state capture," said Gordhan.

"More effort is required to respond to the cash shortfall that the airline is experiencing in this financial year. Unfortunately, the strike is not helping as it exacerbates the financial crisis and might put the airline in a precipitous position."