Editorial: SAA is THE test of reform

Finally, the hammer has fallen. SAA has been placed under business rescue.

In a dramatic flurry of events this week, the national carrier’s board caved and applied for business rescue.

The minister of public enterprises endorsed the decision. The airline had run out of money.

For government, this is THE litmus test.

Can a deeply flawed and financially devastated state-owned enterprise (SOE) be nursed back to health?

More importantly, can the weight of the political decision rise above the opposing factions within the governing party?

The broader public reaction was positive – no more taxpayer money carelessly thrown down an endless black hole of debt.

For labour, the EFF and some within the governing party, the rising cacophony of rhetoric about “selling out to Cyril’s friends” was as predictable as the sun rising.

In the end, the reality must hold the centre and sense must prevail. SAA, ultimately, is an unnecessary national asset.

A vanity project that, since 1994, has sucked a whole R57 billion out of the fiscus.

This does not mean it serves no purpose – a functional, profit-driven airline can bring many economic benefits, and boost tourism and travel to and from the country.

Placing SAA into business rescue must resonate at a deeper level, registering the political will to end the drain on the fiscus and taxpayers.

As the economy stumbles between growth and contraction, rising debt, lower revenue collection, and the looming spectre of ratings downgrades and capital flight, the need for direct and unambiguous economic reform is of paramount importance.

In the stable of SOEs that require urgent reform, SAA is low-hanging fruit.

That is not to say business rescue is an easy task or that it will not face fierce opposition from labour, but the airline has less strategic value than Transnet or Eskom, for example.

The appointment of the rescue practitioner is already facing opposition, including accusations of predetermined decisions.

The noise will grow louder, but this process cannot fail.

If it does, the revival of other SOEs will be nigh impossible.

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