State set to review aviation sector

Cape Town – Public Enterprises Minister Lynne Brown has announced that the government is undertaking a review of the state aviation sector and would also soon make public a strategic equity partner for SAA and South African Express (SAX), following the merger of the airlines.

The merger of SAA with SAX has been on the cards for two years since President Jacob Zuma made the announcement in his State of the Nation Address in 2015.

The intention was to halt the huge losses in the national carrier and improve the balance sheet.

The merger between SAA and SA Express will take place as part of the state review of its aviation sector, Public Enterprises Minister Lynne Brown announced in Parliament. Photo: Bloomberg

In her written reply in Parliament this week, Brown said the merger of the two airlines would still take place. But the government was also busy with the overhaul of the state airline sector in the country.

Brown was answering questions on the departure of SAX chief executive Inati Ntshanga last month. Ntshanga had been with SAX for 13 years and spent the past seven years as chief executive.

“Mr Victor Xaba has been appointed to act in the position of chief executive. Now that the position is vacant, I am taking cognisance of the announcement by the minister of finance in the Budget on February 22, 2017, that advisers are assisting the government with a review of the state’s aviation assets with the goal of developing a stronger, more efficient and sustainable state aviation sector,” said Brown.

“The possibility of consolidation of SAA with SA Express and introducing a strategic equity partner, will be considered,” said Brown.


However, she would not give deadlines on the finalisation of this process, and which equity partners have been identified for the merger.

SAA and SAX have suffered huge financial losses in the past few years, with SAX even failing to table its financials last year and Brown requested an extension from Parliament.

SAA only managed to table its two outstanding financials after the cabinet appointed a new board last year. SAA had over a period of two years not been able to table its financials in the national legislature due to dire financial constraints.

The two financial statements showed a combined loss of R5.6 billion. SAX also suffered a loss of R132 million in 2004/15 with cumulative losses amounting to R733 million.

Read also: #Budget2017: SAA to receive further bailout

Brown told Parliament last month that SAX could not repay its loans of R510 million to Nedbank and Rand Merchant Bank. It was able to pay R58m and they had to renegotiate instalments to pay the balance with the two banks.

SAX is currently operating on a guarantee of R1.1 billion.

Ntshanga told Parliament last year, before his departure last month, that the merger was in the final stages and could be concluded soon.

This was the point emphasised by Deputy President Cyril Ramaphosa in the House that discussions were at an…

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