Comair challenges SAA's R5bn loan

Comair CEO Erik Venter said the loan guarantee gives SAA an unfair advantage.

South African Airways plane. Picture: AFP.

JOHANNESBURG - Newly appointed South African Airways (SAA) board chairperson Vuyisile Kona on Wednesday promised that the airline will not be asking for taxpayers' money again.

Government on Tuesday granted the troubled carrier a R5 billion loan guarantee for its recapitilisation programme.

One of the conditions for the guarantee is that SAA presents a turnaround strategy to Public Enterprises Minister Malusi Gigaba and Finance Minister Pravin Gordhan, by January 2013.

Kona said he is confident of SAA's future plans.

"The current fleet we have is expensive because [our planes] consume a lot of fuel.

"We need to have an airline with the latest equipment. The airline needs people who know what they are doing and are passionate."

The other new board members are Andile Mabizela, Andile Khumalo, Bongisizwe Mpondo, Dr Rajesh Naithani, Carol Roskruge, Raisibe Lepule and Nonhlanhla Kubeka.

COMAIR CHALLENGES LOAN

Comair on Wednesday said government's R5 billion loan to SAA contravenes policy that regulates the ability of private airlines to compete with the national carrier.

The company also said the same policy prevents government from funding SAA's domestic operations.

It is still not clear whether the guarantee will apply to planes used domestically or internationally.

Comair CEO Erik Venter said the loan guarantee gives an unfair advantage.

"Private airlines have to generate sufficient profits to replace its fleet. What we have seen in the past is that domestic operations of SAA, including Mango, have operated at huge losses by undercutting the private airlines.

"So in effect, they [SAA] have been driving the private airlines out of the market."

Venter said government must hold consultations if it wants to change its policy.