There’s interest from private sector funders and private equity investors to secure a piece of the new proposed airline. According to the Department of Public Enterprise, it has received unsolicited proposals from various interested parties. South Africa’s national carrier SAA is currently under business rescue.
South African Airways has been relying on government bailouts for some time now. It has been struggling financial over the past ten years – incurring billions in losses.
The ailing national carrier is currently under business rescue. Last week, its administrators proposed a restructuring plan – which government and its creditors are still considering.
The department of public enterprises, which is the shareholder representative of the ailing airline, says it will engage interested parties constructively.
Acting Director-General at the Department of Public Enterprises, Kgathatso Tlhakudi says, “Unfortunately, privatisation has gained a very bad reputation in SA today. The reality is that we need their expertise and capital to improve the performance of our SOE’s. Government as a 100% shareholder has on many occasions attempted to turn around the entities without success. This signals that we need to start doing things differently.”
Aviation expert Guy Leitch expects further job losses – if it pursues the private equity route. “The big question behind that is whether government would feel secure enough in letting the so-called priced national assets even if their worthless handed over to private enterprise. One of the first things that would be even further loss of jobs and we’ve seen Pravin Gordhan extreme reluctance to allow the loss of jobs to retrench in SAA,” Leitch explains.
The business rescue practitioners have proposed that the government raise R10,3 billion to launch a new version of SAA. At the same time, the department says it is intent on pursuing credible proposals for investment and strategic partnerships with the private sector, as well as equity participation for employees.
Restructuring plan
Creditors are due to vote on the restructuring plan on Thursday, but one of SAA’s creditors – private airline Airlink – has launched an urgent court application to try to prevent the vote from happening.
The Department of Public Enterprises, which is responsible for SAA, said in a statement: “Government is intent on pursuing credible proposals for investment and strategic partnerships with the private sector, as well as equity participation for employees.”
It did not name any of the funders, investors or partners who had expressed an interest in the new airline to emerge from the wreckage of SAA.
The state carrier has not made a profit since 2011 and has been a drain on the public purse at a time of weak economic growth.
If the restructuring plan is approved by creditors, the administrators say they need government to provide a commitment on funding by July 15.
Finance Minister Tito Mboweni is due to deliver an emergency coronavirus budget on Wednesday, when any new government funding for SAA could be revealed. -Additional reporting by Reuters
