{"id":126823,"date":"2018-11-29T10:47:45","date_gmt":"2018-11-29T08:47:45","guid":{"rendered":"http:\/\/www.myza.co.za\/south-african-taxpayers-cant-keep-bailing-out-broken-airline-the-conversation\/"},"modified":"2018-11-29T10:47:45","modified_gmt":"2018-11-29T08:47:45","slug":"south-african-taxpayers-cant-keep-bailing-out-broken-airline-the-conversation","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/south-african-taxpayers-cant-keep-bailing-out-broken-airline-the-conversation\/","title":{"rendered":"South African taxpayers can’t keep bailing out broken airline | The Conversation"},"content":{"rendered":"

South African taxpayers can’t keep bailing out broken airline<\/a>: <\/p>\n

SAA appears to be in a tail spin.<\/span> EPA\/Udo Weitz<\/span><\/span><\/figcaption><\/figure>\n

R21 billion: that\u2019s how much South Africa\u2019s beleaguered national carrier, South African Airways (SAA), says it needs to keep running.<\/p>\n

SAA has reached this point in its financial crisis through persistent mismanagement and cronyism, with the SA government as main shareholder refusing to take tough decisions about the company. But such decisions can\u2019t be delayed any longer.<\/p>\n

In theory, it\u2019s the South African government that supports SAA and bails it out in times of need. But in practice, it\u2019s the country\u2019s already struggling taxpayers who foot the bill. And they keep doing so, with no clear plan in sight to stem the airline\u2019s financial haemorrhaging. The Free Market Foundation, an economic and policy think tank, estimates that SAA has already cost taxpayers close to R60 billion in the past 20 years.<\/p>\n

I have argued for some time that SAA is nothing more than a government vanity project and should be sold. In March 2016, when I first said this, it might have been feasible; then, the airline was still financially viable. That moment has passed as the government kept SAA as a vanity project.<\/p>\n

President Cyril Ramaphosa says that closing SAA would destabilise other state-owned entities and the broader economy. <\/p>\n

The country\u2019s recently appointed finance minister Tito Mboweni disagrees. In his recent medium-term budget policy statement, Mboweni warned that failing state-owned entities are \u201cno holy cows\u201d and would be expected to pull their financial weight.<\/p>\n

South Africa can\u2019t afford any more delays. Strong players in the continent are eating into the airline\u2019s already weakened base. These include Ethiopia and Kenya\u2019s national carriers as well as minnows like Namibia\u2019s airline.<\/p>\n

In the meantime, South Africans taxpayers are caught between a rock and a hard place. The country can\u2019t afford SAA anymore \u2013 and can\u2019t afford to close it down. What is the next step, then?<\/p>\n

The only option left for SAA<\/h2>\n

I believe there is only one option: an independent cost-benefit analysis into SAA\u2019s continued existence and the possible implications of its sale or closure. This should be an independent process; both SAA and the South African government have vested interests in the outcome.<\/p>\n

This would be a first, and its successful completion could set a benchmark for judging the continued financial viability of other problematic state-owned entities like Denel and the South African Broadcasting Corporation.<\/p>\n

This is urgent. SAA is not just asking for more money to keep itself airborne. Its chief executive, Vuyani Jarana, has told a parliamentary committee that the airline will not be profitable by 2020, as it initially announced. It now says it will be profitable by 2021. <\/p>\n

One of the reasons it has fallen short is that SAA\u2019s management got its oil price forecasts completely wrong. It planned for an average oil price of US$ 45 per barrel over. The actual average has turned out to be US$ 75 per barrel.<\/p>\n

It does not take a lot of management competence to understand that a single oil price cannot be used in profitability forecasts for a company sensitive to oil price fluctuations, as is the case with an airline. <\/p>\n

It has also emerged that senior managers at SAA are earning enormous monthly salaries (Jarana, for instance, earns R6.7 million a year). This fact, coupled with obviously chronic financial mismanagement \u2013 how else to explain that the airline spent its last government bailout of R5 billion in just one month? \u2013 is galling to taxpayers.<\/p>\n

During its presentation to Parliament, SAA\u2019s managers offered no alternative plans. It\u2019s a government bailout \u2013 or bust. But this isn\u2019t sustainable. An independent assessment is critical if SAA is to be saved from itself; and the country\u2019s reeling taxpayers are to be saved from the airline\u2019s excessive demands.<\/p>\n

\"The <\/p>\n

Jannie Rossouw is an NRF-rated researcher and previously received funding from the NRF. On occasion, he is a passenger on SA Airways. <\/span><\/em><\/p>\n

Source:<\/strong> The Conversation \u2013 Articles (AFRICA)<\/a><\/small>
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Read more on The Conversation<\/a>.<\/p>\n

Join the fun:<\/strong> Add Your event<\/a> | Submit a Press Release<\/a> | Add your listing<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

South African taxpayers can’t keep bailing out broken airline: SAA appears to be in a tail spin. EPA\/Udo Weitz R21 billion: that\u2019s how much South Africa\u2019s beleaguered national carrier, South African Airways (SAA), says it needs to keep running. SAA has reached this point in its financial crisis through persistent mismanagement and cronyism, with the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4584],"tags":[3050,2314,33234,3774,6764,8890,5122,3576,12056],"class_list":{"0":"post-126823","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-africa-news-2","7":"tag-african","8":"tag-airline","9":"tag-bailing","10":"tag-broken","11":"tag-cant","12":"tag-conversation","13":"tag-keep","14":"tag-south","15":"tag-taxpayers","16":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/126823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=126823"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/126823\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=126823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=126823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=126823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}