Erwin backs Mango as SAA bale-out looms
Parliamentary Editor
CAPE TOWN — Public Enterprises Minister Alec Erwin yesterday blamed attempts by the national airline, South African Airways (SAA), to compete in the low-cost air travel market for SAA’s financial woes.
The airline has since formed Mango to compete in the no-frills market.
Addressing Parliament yesterday, Erwin said moves to get funding for the beleaguered national carrier were almost complete.
He again did not say whether the injection would come from government or how much it would be. It is estimated that it will be in the region of R4bn, though.
Erwin, piloting the SAA Bill through the National Assembly yesterday, threw his weight behind the creation of low-cost subsidiary Mango, saying SAA was simply doing what competitors such as Comair and British Airways had done.
“The airline industry is volatile and we are in the process of planning the new capital injection,” he said. “This needs to be completed very soon. The process of returning to profitability is on track. There is work to be done but we are moving clearly in the right direction.”
He said that SAA, as the second-oldest commercial airline in the world, was a national asset that had to be preserved. He strongly defended a state bale-out for the airline, saying: “More (airlines) have been topped up than haven’t. This is an exceptionally difficult industry. I think there are probably very few airlines in the world that have not received state support.
“Our objective is to reduce the dependence and return it to profitability. We do have to make it operate more efficiently and to lower its basic cost structure, across the board and not focusing only on employees.”
On the issue of the low-cost end of the market, he said that one of the problems had been that to compete with “the very viable and vibrant low-cost market, SAA had to discount so many fares on its higher-cost airline that the effect on the total airline was negative”.
Erwin also moved to address concerns expressed by some members of Parliament’s public enterprises committee that if portions of the carrier were sold, foreigners could end up controlling the national airline.
“For SA, when we speak of SAA, we are talking about the second-oldest airline in the world. It would be a sad day if we were not to maintain this proud brand and its reputation.
“We should also stress that SAA’s reputation in regard to safety and pilots is outstanding and it ranks as one of the top airlines in the world.”
The SAA Bill, which received the support of the National Assembly, will remove the airline from being part of Transnet and make it an independent, state-owned enterprise reporting directly to the public enterprises department.
The concurrence of the National Council of Provinces and the signature of President Thabo Mbeki are needed to make the bill law.
Article from http://www.businessday.co.za/
If SAA concentrated more on business than trying to force a monopoly, maybe they would get their act straight. At www.southafrica-carhire.com, we are dedicated to clients
CAPE TOWN — Public Enterprises Minister Alec Erwin yesterday blamed attempts by the national airline, South African Airways (SAA), to compete in the low-cost air travel market for SAA’s financial woes.
The airline has since formed Mango to compete in the no-frills market.
Addressing Parliament yesterday, Erwin said moves to get funding for the beleaguered national carrier were almost complete.
He again did not say whether the injection would come from government or how much it would be. It is estimated that it will be in the region of R4bn, though.
Erwin, piloting the SAA Bill through the National Assembly yesterday, threw his weight behind the creation of low-cost subsidiary Mango, saying SAA was simply doing what competitors such as Comair and British Airways had done.
“The airline industry is volatile and we are in the process of planning the new capital injection,” he said. “This needs to be completed very soon. The process of returning to profitability is on track. There is work to be done but we are moving clearly in the right direction.”
He said that SAA, as the second-oldest commercial airline in the world, was a national asset that had to be preserved. He strongly defended a state bale-out for the airline, saying: “More (airlines) have been topped up than haven’t. This is an exceptionally difficult industry. I think there are probably very few airlines in the world that have not received state support.
“Our objective is to reduce the dependence and return it to profitability. We do have to make it operate more efficiently and to lower its basic cost structure, across the board and not focusing only on employees.”
On the issue of the low-cost end of the market, he said that one of the problems had been that to compete with “the very viable and vibrant low-cost market, SAA had to discount so many fares on its higher-cost airline that the effect on the total airline was negative”.
Erwin also moved to address concerns expressed by some members of Parliament’s public enterprises committee that if portions of the carrier were sold, foreigners could end up controlling the national airline.
“For SA, when we speak of SAA, we are talking about the second-oldest airline in the world. It would be a sad day if we were not to maintain this proud brand and its reputation.
“We should also stress that SAA’s reputation in regard to safety and pilots is outstanding and it ranks as one of the top airlines in the world.”
The SAA Bill, which received the support of the National Assembly, will remove the airline from being part of Transnet and make it an independent, state-owned enterprise reporting directly to the public enterprises department.
The concurrence of the National Council of Provinces and the signature of President Thabo Mbeki are needed to make the bill law.
Article from http://www.businessday.co.za/
If SAA concentrated more on business than trying to force a monopoly, maybe they would get their act straight. At www.southafrica-carhire.com, we are dedicated to clients
Labels: South Africa - Airlines
