South African Airways (SAA) needs at least a R10bn capitalisation to get on the right footing.
Speaking at Treasury on Friday, Gigaba said the Cabinet had appointed four ministers (of Public Enterprises, Telecommunications and Postal Services, Finance, and Economic Development) to look at various options to capitalise SAA.
"At the present moment, there is a R10bn capitalisation required for SAA but the form of that recapitalisation and the model are not yet finalised," he said, explaining that it had to go through Cabinet first.
Gigaba said one of the biggest concerns remained governance of state-owned entities (SOEs), particularly in terms of Eskom and SAA, explaining that they needed to become financially stable and win investors’ confidence.
"Any more guarantees and the risk to government would be quite enormous," he said.
"I have expressed my displeasure and discomfort about the provision of government guarantees to support operational expenditure.
"Government guarantees should support capital expansion."
Touching on SAA specifically, Gigaba said: "There are various steps to get SAA on a proper footing by focusing on the management, governance, business model and financial stability."
He said the reports were submitted to Parliament’s standing committee on finance four weeks ago.
SAA also had about R2bn that could be harvested through uncollected ticket fares and renegotiated contracts, he said.
A number of options had been put forward to Cabinet, such as the disposal of noncore assets, which he called a "very thorny issue", share equity, public-private partnerships and a full share swap with Telkom.
So far, said Gigaba, the appointment of a CEO had been dealt with; and the restructuring of the board and implementation of a Cabinet decision about the new chairperson would happen in September.
He said current chairwoman Dudu Myeni had served for eight years on the board, two years longer than an acceptable term.
"It is not about the current chairperson being demonised but the issue is about good governance … it is time to hand over to a new chairperson and bring it back to financial stability."
He said it depended on the financial pressures that Treasury faced.
Standard Chartered Bank called their loan at the end of June; Citibank had also done so; while other banks had rolled their loans over to the end of September.
Gigaba welcomed Denel’s just-announced decision to sever ties with VR Laser, its partner in the Denel Asia joint venture.
The decision showed commitment to good governance, he said.
Denel announced the decision on Friday afternoon. Denel Asia never traded as it never received Treasury approval, as questions were raised about its ties to the Guptas.
VR Laser is owned by Salim Essa, a Gupta associate.
But Denel’s acting CEO, Zwelakhe Ntshepe, denied on Friday that Denel was in business with the Guptas.
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