South African President Cyril Ramaphosa has ruled out the closure of the country’s national carrier South African Airways over its financial woes.
Addressing parliament on Tuesday, Ramaphosa said the cash strapped shutting down SAA, as the airline is commonly referred to, would collapse the country’s public finances as the government would have to service its debts immediately.
The South African national carrier currently has 14.2 billion rand (approximately $1B) which falls due tin March 2019.
The airline has toyed with the idea of selling off its assets as banks continue to shy away from lending.
The president was responding to queries raised by Democratic Alliance (DA) leader Mmusi Maimane.
Last week Finance Minister Tito Mboweni stirred debate about the SAA’s future by hinting that he would prefer closing down the debt-ridden airline.
Ramaphosa however appeared to shoot down the idea arguing that closing the airline would erode massive value given its huge debt burden.
“Immediate payment of that debt has an impact on debt carried by all other state-owned enterprises and that can collapse the fiscus,” Ramaphosa told parliament.
The president suggested that restructuring plan be put in place which could see the airline opened up to strategic investors.
“The future of the airline is linked to how it is stabilized, and one way to do that is to get a strategic equity partner to help take the airline forward,” he said.