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By Rene Vollgraaff and Renee Bonorchis
(Bloomberg) – South African President Cyril Ramaphosa said the government disagrees with a decision by administrators of the country’s state-owned airline to cut almost all domestic routes as part of a turnaround plan.
Under South Africa’s bankruptcy laws, the business rescue team has almost unfettered powers to manage SAA, and any attempt by the government to interfere could place the entire process at risk. It would also cast doubt over its commitment to take unpopular decisions to turn around other struggling state companies.
SAA’s domestic low-cost carrier Mango flies the routes being discontinued and is unaffected by the plan. Privately owned airlines operating in the country include Comair-owned Kulula, FlySafair and Airlink.
“We would like SAA to remain a robust and successful airline,” Ramaphosa said before traveling to Ethiopia for a meeting with fellow African leaders. “That is why we took the decision not to close SAA, but to ensure SAA is revamped, is resuscitated and is operating profitably.”
Public Enterprises Minister Pravin Gordhan said the announcement on the flight cuts may jeopardise SAA’s long-term future, and the government will propose the decision be reviewed. The business rescue team needs to balance trimming unprofitable routes with ensuring the future sustainability of the airline and the domestic aviation industry, he said in an emailed statement.
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