The Department of Public Enterprises (DPE) says it has received voluntary proposals from private sector funders, private equity investors and potential airline partners interested in investing in a new, restructured South African Airways (SAA).
This announcement comes just days ahead of a meeting where SAA creditors will vote on whether to adopt the airline’s business rescue plan, which will see the government commit to raising R10.3 billion to launch SAA Restructured.
It also comes just a day before Finance Minister Tito Mboweni is due to table his emergency budget, in which commentators have said he will have to provide clarity on whether the government will fund its commitment to having a national carrier.
An environment ripe for partnership
The DPE, which is the shareholder representative of the airline, said that it will engage with those interested in funding the airline “constructively in pursuit of government’s national developmental and strategic agenda to rebuild our economy in a postcode-19 era.”
“Government is intent on pursuing credible proposals for investment and strategic partnerships with the private sector, as well as equity participation for employees,” the department said in a statement.
“Such partners will also introduce technical, financial, and operational expertise.”
The DPE said due to the pandemic and subsequent travel restrictions, airlines across the globe have seen a severe drop in flights – placing many of them in financial distress
“Therefore, there are possibilities for airline partnerships to improve scale and scope and ensure continuity of value creation to the South African economy and long-term sustainability of the aviation industry.”
SAA rescue practitioners Les Matuson and Siviwe Dongwana stated in their business rescue plan that engagements with strategic equity partners – which were underway prior to Covid-19 bringing the aviation sector to its knees – would be “revived once the global aviation industry is back on its feet.”
No more of the same
SAA has been under severe financial distress over the past ten years and has not made a profit since 2011, incurring R27 billion in losses since 2012.
In addition to supporting an airline with no financial hangovers, the government said the new airline would need to have a competent board of directors with aviation skills, a modern and efficient fleet, a motivated workforce, technological agility and a service with the right routes and competitive prices.
“Government has expressed its intent and commitment to fundamentally restructure and transform SAA into a viable, sustainable and competitive national carrier.
“The broader aviation industry and the passenger air transport sector specifically, is essential for servicing and growing economic sectors, including tourism, business connectivity and cargo carriage,” it said.