South Africa has announced plans to sell a stake in its national airline, South African Airways (SAA), looking to raise about $400 million. The funds will then be used to re-capitalize the reformed SAA.
The government hopes that some of SAA’s lucrative routes and valuable landing slots, such as at London’s Heathrow Airport, will attract interest from potential investors.
Furthermore, the South African government is in talks with Fairfax Africa Holdings Corp. about buying a stake in the airline.
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 government and labour groups’ rescue plans projects that the airline needs to raise about $595 million (10 billion rands). Of this, 2.8 billion rands will be used to bring back its planes to the sky, whereas 3 billion rands will cater for ticket refunds. 1.7 billion rands will pay its lessors, and 2.2 billion rands will finance voluntary packages as the airline cuts its staff from 4,800 to 1,000.
Although Ethiopian Airlines had expressed interest in South African Airways, it announced that it would only provide operational assistance in the range of aircraft, pilots, and maintenance services.
According to Ethiopian Airlines Chief Executive Officer, Tewolde GebreMariam, the airline is not seeking to help with debt repayments or the cost of reducing the workforce. Still, they only want to make it very easy for SAA to start the airline by providing aeroplanes, expertise, pilots, technicians, and leadership.
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