SAA capital injection to boost competitiveness in Africa

Wednesday, May 16, 2012

Cape Town - A new planned capital injection by the government into South African Airways (SAA) is part of a plan to make the carrier more competitive in routes on the African continent, and does not constitute a bailout of the national carrier, says Public Enterprises Minister Malusi Gigaba.

"SAA has not come to us and said 'we are in the red, please help us out with money'," said Gigaba, briefing media ahead of his Budget Vote in Parliament on Wednesday.

He said the planned capital injection would fund a new aviation strategy, which his department, together with SAA and SA Express, had drafted and which would be submitted to Cabinet next month.

The strategy focuses on boosting services to the continent and using air transportation to boost regional integration.

Gigaba said discussions were still underway with the National Treasury and stressed that no figure had been set yet on the amount of capital to be injected into SAA.

"The R6 billion [injection into SAA] is something I am reading about in the newspapers as well," he said.

The total number of new aircraft that SAA needed was also still under discussion.

The minister said the state needed to maintain a hold over its flagship carrier, especially in the uncertain economic times.

"The damage both to business and tourism of unreliable air travel to South Africa will be immeasurable," he said.

The volatile economic times had resulted in fuel price increases, which made it vital for the government to help SAA procure a modern and fuel-efficient fleet if the carrier was to remain competitive.

African routes had also been neglected, he said, adding that SAA needed new aircraft and needed to be competitive with other carriers on the continent.

"Given our location on the southern tip of the African continent and the extremely volatile nature of the airline industry, I believe that it is critical that South Africa should sustain a national flag carrier to ensure security of air transport to our country," he said.

Africa would constitute the primary market and routes for the future SAA and Mango, he said, adding that five new routes had been added in Africa since October last year.

Thursday will see the maiden flight for a new SAA service between Johannesburg to Cotonou, Benin.