The slash-and-burn approach to the mismanagement of the South African Airways (SAA) by the African National Congress government adopted by the newly appointed Minister of Finance, Tito Mboweni is egoistic, myopic, ahistorical, economically unsound, problematic, not well thought out and reflects its author’s short-termism and ideological bankruptcy.
It is egoistic because the elite and not the masses are going to benefit from the privatisation of the national carrier. Mboweni is definitely not imbued with altruism to privatise the SAA as demonstrated during his New York investment meeting utterances in which he publicly invited some business people known to him to buy SAA; myopic because he is unwilling to consider new and innovative ideas or other people’s opinions as well as a groundswell of opposing voices from the masses and political parties such as, for example, the Pan Africanist Congress of Azania against privatisation of state enterprises; ahistorical because he ignored the history of the South African Airways from Union Airways established by Allister Miller in 1929 and was financed by the Atlantic Refining Company and supported by a small government subsidy until it was taken over by the South African government in 1934; it is economically unsound because SAA cannot be sold to private individuals simply because it was run aground by ruling party members such as Saki Macozoma and his white friend Coleman Andrews; problematic because privatisation is not a panacea and has never been efficiently managed and financed as public enterprises have been: privatisation is about the bottom line and not the general good; not well thought out because it focuses on short-termism as opposed to long-term goals; ideologically bankrupt because he is an apostle of the discredited neo-liberal policies of the Washington Consensus of the failed global capitalist system which has destroyed civilisations around the world.
BRIEF HISTORICAL BACKGROUND
Union Airways was primarily a mail carrier, but from September 1929 it also transported passengers. The South African government bought Union Airways in 1934, and renamed it South African Airways. Union Airways was not profitable during its operations.
But Miller never thought of selling it to private individuals 84 years ago. However, in 2018, Mboweni thinks of selling SAA to private individuals.
When one of the Junkers W34 aircraft crashed in bad weather near the town of Eshowe in late 1933, two crew and three passengers were killed (one passenger survived). This was a major blow to the airline and forced Miller to approach the South African government to take over the operation.
The South African government took over the assets and liabilities of Union Airways on 1 February 1934. This included 40 staff members and three Junkers F13s, one DH60 Gypsy Moth, one DH80A Puss Moth and a leased Junkers F13 and Junkers A50. The airline was named South African Airways and fell under the control of the South African Railways and Harbours administration. SAA honoured the order for the three Junkers Ju 52/3m aircraft.
South Africa Airways began operations on 1 February 1934. The International Air Transport Association (IATA) was founded in Havana in April 1945, and SAA became one of 44 active founding members.
When the ANC government took over SAA, it was flying from Johannesburg to over 35 destinations across Africa, the Middle East, Asia, Europe, Australia and North and South America.
Due to economic sanctions, flights to New York were suspended in November 1986. The USA withdrew from its landing rights in South Africa. The following year, the Australian government took the same action against South Africa.
In the 1990’s, for the first time in 28 years, SAA flights operated via Sudan and Egypt. Economic sanctions against South Africa were lifted, and flights to New York and Australia resumed.
On board domestic flights, SAA introduced multi-lingual greetings in English, Zulu, Sotho and Afrikaans. On international flights, passengers were greeted in the relevant language of their destination.
SAA’s Cadet Pilot Training programme was launched to provide previously disadvantaged individuals an opportunity to become pilots.
On 22 March 1997, SAA unveiled a new corporate identity with its aircraft tail designed to reflect the colours of South Africa’s new national flag: red, blue, gold, black and green which some of us do not really care about which is a story for another article.
In the 2000’s, South African Airways embarked on an extensive fleet renewal programme and appointed Airbus as its supplier. The airline placed a staggering order for 41 new aircraft with a price tag of US$3.5 billion – Africa’s biggest jetliner acquisition.
SAA launched an online check-in system and a self-check-in kiosk, a simpler, smarter and faster way for passengers to check in.
SAA signed a US$200 million deal with Rolls Royce to supply the airline’s nine A340-600s with Rolls Royce Trent 500 engines.
After an absence of more than 40 years, South Africa was reinstated as a member of the International Civil Aviation Organisation. Thereafter, it became a member of the global Star Alliance in April 2006, and with it came seamless worldwide air travel. In addition, it unveiled two Star Alliance branded aircraft – a 737-800 and Airbus A340-600 – as part of the global network’s requirements.
In 2005 SAA became the first non-Saudi airline allowed to fly to Medina to carry Muslim pilgrims going on Haj.
This is how SAA was when it was handed over to the ANC government and that is how it was in 2005. So what happened to these assets and well-oiled machine? Mboweni must investigate and tell the country what happened to SAA assets and that abandoned magnificent management style instead of coming up with his quick-fix solution of selling SAA to the highest bidder. SAA was well managed for 60 years but was ruined in about 20 years.
Sasol was “formed in South Africa in 1950 to make oil from coal for a country with no large crude oil reserves.” According to a 2011 Friends of the Earth (FOE) report on the company, Sasol initially ran at a loss, “consuming significant state funds until the 1970s when the oil crisis drove up oil prices.”
Sasol’s original coal-to-liquids (CTL) plant at Sasolburg was commissioned in 1955. It was subsequently converted into a gas-to-liquids (GTL) facility and is still in operation. Two large CTL production facilities were commissioned in the early 1980s in Secunda, shortly after Sasol was privatised in 1979. Yet the state-owned Industrial Development Corporation (IDC) retained a major shareholding, and FOE states that “Sasol enjoyed substantial state subsidies throughout the 1980s and 1990s when the oil price remained low. It was understood that this would be paid back if oil prices rose – as they did in the 2000s. Sasol then argued that the agreement had lapsed so it would not repay the subsidy. With demand for fuel rising, the government is now looking to Sasol to expand production”.
Instead of this insipid call to sell SAA, is it not prudent to recoup the country’s looted funds by ABSA with the collusion of the South African Reserve Bank and those that were stashed offshore by ARMSCOR and uncollected debts from Sasol and other entities in order to resuscitate SAA?
One of my first criticisms of Mboweni, if my memory serves me well, was in 1995 in a City Press letter when, as Minister of Labour, when he suggested that state enterprises be sold to pay some debts. My other criticism of Mboweni was in the Sowetan in April 2008 in this link https://www.sowetanlive.co.za/news/2008-04-15-pegging-inflation-is-not-enough/.
The following was my recent criticism of Mboweni after his mini budget speech:
TITO AND NHLANHLA ARE LIKE PEPSI AND COKE, SYPHILIS AND GONORRHEA
Many friends probably remember a post similar to the above heading. What I meant was that there was no difference between Nhlanhla Nene and Tito Mboweni when President Cyril Ramaphosa replaced Nene with Mboweni. I also said it was like rearranging the deck chairs in the titanic.
I didn’t listen to Mboweni’s mid-term budget speech but I heard on Power FM that one of the things he said was that South African Airways and other non-performing public enterprises must be privatised.
Why doesn’t he suggest that the corrupt ANC government be privatised because it is the one that is responsible for running aground those public enterprises? Saki Macozoma brought in Coleman Andrews to the South African Airways and completely destroyed and left before his contract ended. Instead of talking nonsense, Tito should recoup the money SAA lost to Andrews and Macozoma and open a case of corruption against them. He should also find out where Trevor Manuel did with Special Pension Funds when he was Finance Minister.
For further reading on how Macozoma and Andrews bankrupted SAA, please open the link below and read the short article https://www.news24.com/SouthAfrica/R200m-for-SAAs-ex-CEO-20010531?fbclid=IwAR044gJzPE_ewTO4G_mlTvZmJTg0VkOibSyF4u3gSlvUJVj7FIsM4FJbGKM
When the news broke that Mboweni was going to replace Nene, I, contrary to those who termed the appointment as a “masterstroke”, concluded that that could not be a good appointment because he was coming with poison from the SARB.
In 1985 apartheid government officials and captains of industry knew they were going to hand over the crown without the jewels to the ANC, they privatised the mint and other SARB subsidiaries. This is what Mboweni should fight to restore to the South African government rather than mouthing us the bunkum of selling SAA.