South Africa fears knock-on effect if national airline fails

The South African government’s attempts to resuscitate the embattled national airline were justified because failing to do so would erode the creditworthiness of other indebted state companies, with negative repercussions for the entire economy, a cabinet minister said. SAA has been in bankruptcy protection since late 2019 and was grounded in March last year. The National Treasury has set aside 10.5b rand ($713m) to help get the airline flying again, but efforts to revive it have been hobbled by the Covid-19 pandemic and a resultant decline in demand for air travel. While civil-rights groups and opposition parties say the country has more pressing priorities than bailing out SAA, Khumbudzo Ntshavheni, an acting minister in the presidency, said allowing the carrier to fail would erode confidence in the ability of other state entities to settle their debts. “If you don’t bail out SAA and you don’t ensure its survival, then lenders will look at your other companies,” Ntshavheni said Monday. “The view will be that government dumped SAA. What guarantee do they have that the same won’t happen” elsewhere? she said.<br/>