Placing SAA under business rescue ‘extremely good’ – economist
Econometrix economist Francois Stofberg has
hailed the decision by the government to place the embattled South
African Airways (SAA) under business rescue as good
news for the economy.
This comes after Public Enterprises Minister Pravin Gordhan issued a statement to confirm that SAA will be placed under business rescue with immediate effect.
This decision was taken by its board and is supported by the government.
Stofberg says putting the national carrier under business is no small matter.
"It takes away the governorship of one of the largest and loss-making institution, probably in South Africa. It was a bottomless pit, hard-earned tax money has just been thrown after it.”
Government will still give SAA an additional R2 billion in "a fiscally neutral manner" to help keep the airline operational.
“It must be clear that this is not a bailout,” Gordhan said in the statement.
"This is the provision of financial assistance in order to facilitate a radical restructure of the airline."
The move comes a few days after the Department of Public Enterprises announced that SAA will be going through what it called radical restructuring.
In a statement, the department said the radical restructuring process would ensure SAA's financial and operational sustainability.
Listen to Stofberg below: