JOHANNESBURG, (The Southern African Times) – 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.
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 department is in talks with Fairfax Africa about a stake in the airline, the Financial Mail reports, without saying how it got the information.
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 revival plan that includes firing almost 80% of SAA’s workforce, a sum calculated by the administrators as about 10.5 billion rand ($685 million). The outlay, yet to be delivered, is intended to get SAA flying again.