Govt seeks more control over SAA

GOVERNMENT is
contemplating the
introduction of new
legislation that will enable it
to rein in state-owned entities
(SOEs), such as SAA.
The intention is to cost the
developmental mandates
undertaken by companies
separately from their
commercial activities, with
the financial implications
being more clearly set out in
shareholder compacts, Finance
Minister, Nhlanhla Nene,
announced during his minibudget
speech last month.
This process was being piloted
at a number of entities. Work
had also begun to develop a
uniform legislative framework
to regulate SOEs, he said.
SAA postponed its AGM
in early October, waiting for
Treasury to sign off on a new
state guarantee. However,
the airline was required to
first meet certain conditions
set by the Finance Minister.
Government guarantees to
SAA currently amount to
R14,4bn, of which R11,4bn
has been used. SAA is
only expected to generate
sustainable profits in five
years’ time, it was reported
in the Medium Term Budget
Policy Statement.
Financing SOEs that were
responsible for growthenhancing
infrastructure
investments was one thing,
but relief for entities that
should be self-sustaining or
that had mismanaged their
commercial activities was
another issue, the Minister
said in his speech. “This
remains a serious risk to the
medium-term fiscal outlook.
Work has therefore begun
on a legislative framework
to regulate state-owned
companies and to address
their governance challenges.”
A Mail & Guardian report
speculated that Treasury’s
turnaround strategy for
SAA would include making
significant changes to its
board, including the removal of
chairperson, Dudu Myeni. In
June this year, the chairperson
instructed SAA to pull the
plug on an equity partnership
agreement with Emirates
Airline that would have seen
more than R2bn injected
into the cash-strapped entity.
Reliable industry sources
have told TNW that SAA is
considering scrapping its
partnership with Etihad Airways
and that the airline is looking
at negotiating an equity
partnership with Emirates.
SAA spokersperson,
Tlali Tlali, told TNW: “SAA
continuously evaluates any
potential partnerships within
the Star Alliance to which
it belongs and any other
potential opportunities outside
the alliance. We currently have
a partnership agreement in
codeshare with Emirates and
we continue to explore any
opportunities to enhance the
partnership, as we do with any
other codeshare partner. The
codeshare with Etihad is still
in place and if there is any
need to revise it, we will do so
as is the case with any other
codeshare agreement in place
across the globe.