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SA seeking several partners for units of state airline

It’s also seeking partners for subsidiaries such as low-cost airline Mango and catering unit Air Chefs.
Image: Waldo Swiegers/Bloomberg

South Africa isn’t just in talks with potential buyers of a stake in the country’s insolvent state-owned airline, it’s also seeking partners for subsidiaries such as low-cost airline Mango and catering unit Air Chefs.

The result will be a number of private-sector entities working with various parts of South African Airways whenever it resumes operations, according to Public Enterprises Minister Pravin Gordhan. The government had 31 expressions of interest in SAA and are currently whittling down the list, he said.

“At the moment we are not actually looking to raise a specific amount from the strategic-equity partners but rather the viability of their proposals,” he said in a phone interview. “We will only discuss numbers in January.”

The search for a partner for SAA is central to Gordhan’s plan to revive the airline a year after the company went into bankruptcy protection and nine months since it last operated a commercial flight. But the process has dragged on since at least the start of May, and the funds needed to resume flights and pay worker-severance packages remains elusive.

Finance Minister Tito Mboweni allocated R10.5 billion ($692 million) to the airline in October, but SAA’s administrators say only R1.5 billion has been transfered and with conditions attached that breached certain regulations.

“It has been slow progress,” Gordhan said. “The challenge is that the money is coming in tranches and we have to ensure that all obligations in terms of the Companies Act are met.”

Regarding employees, about 4 800 of which are owed severance packages, the minister would only say the issue was a matter being discussed with labour groups and would be “settled soon.” Some workers demonstrated outside SAA headquarters in Johannesburg on Thursday, saying they hadn’t been paid for eight months.

© 2020 Bloomberg

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From Mr. Gordhan’s description of the SAA assets and potential, one would think he was selling the goose that lays the golden eggs instead of the Monday chicken on a spit at Spar.

Sigh …

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