SAA cannot generate cash flow currently – Tito Mboweni

SAA Source: Google Images

South Africa’s Minister of Finance, Tito Mboweni, said that South African Airways (SAA) was unlikely to ever generate sufficient cash flow to sustain operations in its current configuration.

Mboweni said this on Wednesday when he delivered his Medium-term Budget Policy Statement (MTBPS) in Parliament.

Which then begs the question: how long are we going to be on this flight path?

Mboweni said that operational and governance interventions at SAA were required urgently.

The Minister said: “I am pleased to learn that there are conversations involving SAA and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles. We have essentially chosen to subsidise the middle class and wealthy flying around the country and other parts of the world, rather than the ordinary workers who sit in old trains from the townships every day, often getting stuck and being late for work.

“We are also subsiding the wealthy bond holders, who hold government‐guaranteed debt but receive higher yields without additional risk.”

On Eskom, Mboweni, said that government will be supporting the struggling state owned energy supplier, Eskom, with R230bn over the next ten years.

He said: “Government has announced a comprehensive set of structural reforms for Eskom and the energy sector, which we are supporting with R230 billion over the next 10 years. Very difficult budget adjustments have been made.”

Mboweni said that once he is convinced that the Eskom Board and Management has made an irrevocable commitment to implement government’s decisions and there is enough progress, they will negotiate the appropriate size of debt relief.