Business and Technology

Government seeks R6 billion for stake in SAA

South Africa is looking to raise about $400 million from the sale of a stake in its bankrupt national airline, according to people familiar with the situation, a plan likely to lower the chances of finding a partner to aid its revival.

The funds would be used to re-capitalize the reformed South African Airways, the people said, asking not to be identified because the information hasn’t been made public. The government is banking on SAA attracting interest because it holds some lucrative routes and valuable landing slots, such as at London’s Heathrow Airport, they said.

The Treasury referred questions to the Department of Public Enterprises, which didn’t respond to requests for comment.

South Africa’s search for a buyer of equity in SAA comes at a time when the aviation industry is mired in the biggest crisis in its history, having been laid low by the Covid-19 pandemic. Although Ethiopian Airlines Group has said it would consider a deal for SAA, Chief Executive Officer Tewolde GebreMariam has made clear he’s not interested in investing capital.

South Africa Airways (SAA)

Ethiopian is still interested in SAA “but the process is slow as it is complex,” the CEO said in a response to queries last week.

The South African government is also in talks with Fairfax Africa Holdings Corp. about buying a stake in the airline, the Financial Mail reported on Thursday, without saying how it got the information. Toronto-based Fairfax didn’t immediately respond to a request for comment outside Canadian business hours.

SAA has been unprofitable for almost a decade, surviving on state bailouts and government debt guarantees, and was placed under administration a year ago. The carrier has been lying dormant since March, when the fleet was grounded due to travel bans to contain the coronavirus.

South African Finance Minister Tito Mboweni agreed in October to fund a 10.5 billion-rand revival plan that includes providing severance packages to almost 80% of SAA’s workforce. While 1.5 billion rand of that has been transfered, it can’t be used as conditions were attached that breach labor and companies regulation, according to the administrators.

Some workers protested outside SAA’s Johannesburg headquarters on Thursday, saying they haven’t been paid almost six months after the rescue proposal was published.

“You won’t get a meeting of minds, as no other airline will want to put in money to subsidize SAA,” said Joachim Vermooten, an independent aviation analyst in South Africa when asked if SAA could attract direct funding. “The current plans very clearly demonstrate that it’s not a viable proposition.”

The country’s largest banks are nearing agreement to provide about half of the initial amount needed, the people said. London-based Barclays Plc may provide some of the balance in support of a government injection, the people said.

Representatives of South Africa’s biggest lenders and Barclays declined to comment.

In other news – Zoleka Mandela opens up about S.e.xual abuse from Her Childhood

In the wake of the gender-based violence awareness, Nelson Mandela’s grandchild and proud mother Zoleka Mandela opened up for the first time about being a victim of sexual abuse since her childhood. Learn more

Source: mybroadband