Zuma flies SAA in support of SOEs

The president has praised the hospitality of the national carrier and has recommended SAA to all travellers.

President Jacob Zuma. Picture: Reinart Toerien/EWN.

JOHANNESBURG - President Jacob Zuma has used the national carrier, South African Airways (SAA), to New York for the 71st United Nations General Assembly.

The presidency says Zuma decided to fly SAA to the United States to promote and demonstrate government's support for State Owned Entities (SOEs).

The president has praised the hospitality of the national carrier and has recommended SAA to all travellers as the country marks tourism month.

Zuma's own jet, Inkwazi, has recently been grounded after suffering several technical breakdowns.

Despite defiance from opposition parties strongly opposing the move, the defence ministry is in a process of obtaining a new one in the next 18 months.

The Presidency's Bongani Ngqulunga says, "The president has said many times that government will do as much as possible to support SOEs, including SAA. He just thought, since it is tourism month in South Africa, that it's a time to promote SAA."

WHY SOEs NEED SUPPORT

Ratings agency Moody's is warning that political infighting, weak economic growth and mounting debt at state-owned companies all pose a risk to South Africa's credit rating.

Political and financial analysts have warned over the power struggle between President Jacob Zuma and Finance Minister Pravin Gordhan over spending at state-owned companies and plans for a multi-billion-dollar nuclear power programme.

Earlier this month, asset management company, Futuregrowth suspended loans to six SOEs - which include Eskom, South African National Road Agency Limited, Transnet, the Land Bank, the Independent Development Corporation and the Development Bank and is a severe blow for confidence in the SOEs and the country.

Like Moody's, Futuregrowth highlighted political infighting and questions over corporate governance as concerns, saying this made decisions over investment very difficult.

In a show of unity, the president and his Finance Minister held a meeting yesterday where they called on the public to support efforts to boost investor confidence and economic growth.

Zuma says public tiffs, such as the standoff between the Hawks and Gordhan, must stop as it is painting a negative image for the country.

He said the fact that government, business and labour are working together to address economic challenges shows a united front to the world about where the country is going.

Gordhan echoed the president's call for citizens to support "team South Africa", as rating agencies will arrive in the country from next week to assess what work has been done.

SAA'S REGISTERS LOSS OF NEARLY R5 BILLION

The national carrier has posted a loss of nearly R5 billion for the 2014/15 financial year, according to preliminary results released in Parliament.

This after Minister Pravin Gordhan approved an application from the country's cash-strapped national airline for a guarantee as a going concern.

SAA has been surviving on state-guaranteed loans and has failed to submit financial statements for the past two years.

Controversial board chairperson Dudu Myeni, who was reappointed to her position earlier this month, says the airline is in the rights hands.

She says the fact it has met all its obligations, revenue is improving and that new routes have been developed, proves this.

The board chair has now been appointed for a term of just one year, while the rest of the board has been appointed for a longer period.

Additional reporting by Ray White and Gia Nicolaides