THE government has been urged to seek the advice of commercial aviation practitioners before continuing with the privatisation of South African Airways (SAA), which might lead to a disastrous decision for the country.
Former Public Enterprises director-general Kgathatso Tlhakudi said this could lead to an economic disaster, adding that private business exists for profit and does not have a developmental mandate.
Tlhakudi was reacting to Deputy President Paul Mashatile’s remarks that selling SAA to the private sector with capital and expertise to turn the state-owned entity around could be the best way forward.
Mashatile, who made these remarks during his interview with the Sunday Times, said the government was not in the business of owning airlines, and thus, bringing private players on board to make the entity profitable may be the best.
He said the airline has been bailed out a number of times and that the Treasury must have forked out close to R9 billion trying to rescue it.
However, Tlhakudi said the government should seek the advice of patriotic commercial aviation practitioners before continuing with “what would be a disastrous decision” for the country.
“There are many of us who are products of the very state-owned companies that are placed on the chopping block. The government would also want to assess what has happened to the privatised state-owned companies in the last 30 years.
“Those of us who have worked in this space can point to a few disasters where state-owned companies were bought to take them out of the market or the country became beholden to unreasonable demands of private capital,” he said, adding that ArcelorMittal and Denel Airmotive are some examples.
SAA was seen as a black hole for tax-funded bailouts and was placed under business rescue in 2019, but exited in 2021.
Public Enterprises Minister Pravin Gordhan planned to sell 51% of SAA to the Takatso Consortium for R51 – made up of Global Airways and private equity firm Harith General Partners – before he cancelled the deal earlier this year.
The cancellation came after months of drama and fights with the National Assembly’s portfolio committee on public enterprises (PCPE), which has been demanding answers from Gordhan after Tlhakudi accused him of corruption in the deal.
Tlhakudi said Mashatile was in the Cabinet when the decision to abort the privatisation of SAA was made, adding that it would have been helpful if he had been forthcoming on what changed for the government to revisit the idea.
He added that the country also awaiting the report of the sixth Parliament’s PCPE on the malfeasance perpetrated by Gordhan.
Tlhakudi said it was also concerning that the government wants to restart the process without sharing lessons with the country from the last SAA privatisation attempt.
He also accused the ANC of not being transparent about its intentions to sell the SAA during its campaign for the 2024 national elections while the DA was unequivocal about its intentions to privatise as many of the state-owned companies as possible.
These sentiments were echoed by the South African Federation of Trade Unions’ (Saftu) general secretary, Zwelinzima Vavi, who said Mashatile’s comments were reckless, and smacks of a person desperate to appeal to and make himself likeable to the private sector at the expense of the public.
Vavi said the comments contradicted the encouraging statement made by the Minister of Planning, Evaluation and Monitoring, Maropene Ramokgopa, who preferred that the state-owned entities should remain 100% owned by the government.
“Saftu wants the state companies to remain in the hands of the public, not to be sold to the private sector. It is through public ownership that our historic demand for an affordable, reliable and safe transport system can be achieved for the poor working class majority. This includes affordable planes, trains and buses,” said Vavi.
He said selling airlines to the private sector makes the airbuses inaccessible to the working-class, adding they only ride flights when paid for by their employers on business trips.
“Therefore we reject Deputy President Mashatile’s call to auction the SAA, especially after a botched sale went south with Takatso Consortium. The drive to privatise the state companies and liberalisation of markets that have predominantly been dominated by the state have found a refreshed discourse in the wake of the precipitous elections that eroded ANC’s domination.
Bourgeois economists have thus found new confidence in calling for privatisation, backed by comments of people in the government like the Deputy President, despite the government’s efforts to create a government holding company to preserve public ownership whilst insulating it from the executive interference that has brought many SOEs to their knees,” said Vavi.
He said Mashatile was wrong to think that the private sector would bring money to operate SAA if they were to also partner with the government.
Vavi said the public-private partnership models and capital lately demand government guarantees, including financial backing, which would be shouldered by the government’s fiscus.