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Home News S.Africa’s ailing national airline put under Treasury control

S.Africa’s ailing national airline put under Treasury control

Published on 11/12/2014

South Africa's loss-making national airline will be placed under the control of the Treasury, the cabinet announced Thursday, as the carrier battles to turn around its fortunes.

State-owned South African Airways “will be transferred from the Department of Public Enterprises to the National Treasury” under the oversight of Deputy President Cyril Ramaphosa, a cabinet statement said.

Ramaphosa will also oversee efforts to revive two other troubled state-owned companies — power utility Eskom and the South African Post Office.

“The Presidency will closely monitor the implementation of the turnaround plans of these three critical state-owned companies that are drivers of the economy,” the cabinet statement said.

The government has in recent years extended several support packages to the airline, including loan guarantees two years ago amounting to $444 million.

In 2013, senior staff including the chairman and chief executive walked out after a series of poor performances.

The airline announced Thursday that it would increase its code share flights with Etihad, as it seeks to better service key hubs critical to its survival.

The agreement with the Gulf carrier will increase the routes serviced by the airlines from 24 to 49, including Hong Kong, Mumbai and Beijing.

Chief executive Nico Bezuidenhout said the expansion would “strengthen access into the fast-growing China and India markets.”

Media had reported that the routes faced closure as the cash-strapped airline battled to maintain them, with the state-owned airline said to be looking at selling an equity to Etihad.

On Monday Business Day newspaper quoted Bezuidenhout as saying Etihad was well known “to take minority stakes” and that a buying option would be available to them.