(Adds DA comments on SAA, background)
JOHANNESBURG, Aug 23 (Reuters) - South Africa is considering selling its stake in landline provider Telkom to fund a 10 billion rand ($757 million) bailout of South African Airways (SAA), a Treasury spokesman said on Wednesday.
The airline runs one of Africa’s biggest fleets but is loss-making. It received state funds in July to help to repay debts and also depends on government debt guarantees of about 20 billion rand.
“It’s an option among others we are looking into, and nothing has been finalised,” Treasury spokesman Mayihlome Tshwete said.
Mayihlome was responding to comments by opposition Democratic Alliance party lawmaker Alf Lees, who told parliament Treasury was looking to sell its stake in Telkom to fund SAA.
Minister of Finance Malusi Gigaba told parliament on Aug. 4 the state would not privatise SAA or sell its stake in Telkom to fund bailouts of struggling state firms.
The government holds a stake of about 39 percent in Telkom, while government pension fund the Public Investment Corporation holds another 11.4 percent.
Gigaba has said he would disclose a preferable financing option for SAA at the medium-term budget statement in October.
Deputy finance minister Sfiso Buthelezi earlier on Wednesday told parliament SAA would not be allowed to “go under.”
The Democratic Alliance party has called on the government to privatise the airline.
“We have seen this movie before and we know how it ends – SAA continues to fail and will need more bailouts,” Lees said in a statement, adding that bailouts of state firms were depleting the state coffers and were also a cause of credit ratings downgrades.
Credit ratings agencies say SAA should be reformed and cite the cost of propping it up as a threat to South Africa’s credit rating. S&P Global Ratings and Fitch have downgraded South Africa’s credit to “junk” status.
$1 = 13.2013 rand Reporting by Olivia Kumwenda-Mtambo in Johannesburg and Wendell Roelf in Cape Town; Editing by James Macharia and Jane Merriman