SOUTH AFRICAN GOVERNMENT DEFIES CRITICISM TO BAILOUT DEBT-RIDDEN NATIONAL CARRIER

CAPE TOWN, South Africa, In defiance of mounting criticism, the Finance Ministry

announced a plan, to bail out debt-ridden South African Airways (SAA), to the tune of at least three billion rand (about 222 million U.S. dollars).

This brings the SAA bailout for the year to 5.2 billion rand (about 385 million dollars).

“The Government has approved the transfer of funds from the National Revenue Fund to SAA, to allow the airline to address the debt obligations to Citibank, thereby avoiding a default,” the ministry said in a statement.

Funds will also be used to assist SAA with its immediate working capital requirements, said the statement.

“The airline remains a strategic asset and in its role as the flag carrier, it serves as an economic enabler, with direct and indirect benefits across a wide range of economic activity,” the Finance Ministry said.

The government has appointed Vuyani Jarana as permanent Chief Executive Officer for SAA, and he will commence his role on Nov 1, this year.

Jarana’s appointment marks a critical step, in ensuring that the airline’s turnaround strategy is implemented.

The opposition Democratic Alliance (DA), said, it is disappointed, but not surprised, that, Finance Minister, Malusi Gigaba, and the entire Executive, resorted to, once again, raiding the National Revenue Fund to settle part of SAA’s debt.

“Whilst the latest lifeboat will keep the wolves at bay, it will not deal decisively with the funding crisis at SAA, as the airline is currently incurring 350 million rand (about 26 million dollars) in losses every month,” DA Shadown Deputy Minister of Finance, Alf Lees, said.

Given the continued uncertainty over the airline’s ability to repay the loans, the banks would have required onerous conditions, to be met by the airline and the government, the DA said.

This massive and wasteful bailout will take even more money away from rescuing the economy, for the 9.3 million unemployed South Africans, the DA claimed.

Gigaba must take full responsibility for getting himself and South Africa into this mess, by failing to be transparent and decisive over the issues plaguing the airline, said the party.

Source: NAM NEWS NETWORK