South Africa Could Sell Shares in Revived National Airline
(Bloomberg) -- South Africa could offer to sell shares in the bankrupt national airline to the public as part of an ambitious new plan to revive the carrier outlined by Finance Minister Tito Mboweni.
The government could bring the various parts of the South African Airways group into one company that would be co-owned by the state, pension funds, individual investors and an operational partner, Mboweni said in an interview at the Bloomberg Capital Markets Focus virtual event on Tuesday. That includes low-cost arm Mango and maintenance unit SAA Technical as well as the flagship carrier.
The plan comes as SAA’s fleet of planes sit idle while the government and administrators strive to complete a plan to get the national carrier back in the skies. Mboweni set aside 10.5 billion rand ($685 million) to fund the carrier last month, but has repeatedly voiced his opposition to the move and this week questioned whether a private company shouldn’t be given the chance to fill that space in the market.
“The government has made a decision to support a restructured airline, not the existing one,” Mboweni said. The new airline “would be partly owned by the government and more broadly by private-sector investors and we should move with speed,” he said.
South Africa has said a number of private investors are interested in helping revive SAA, and Mboweni said talks are going well. However, only Ethiopian Airlines Group has expressed a public interest, and only then without providing capital.
SAA’s biggest champion in government is Public Enterprises Minister Pravin Gordhan, but his plans to create a new airline out of the ashes of the troubled carrier lack detail on how that can be achieved.
SAA has the potential to be a sound business but would benefit from having an industry-investment partner to improve its management, one of the bankrupt state carrier’s administrators said Tuesday. The airline has had nine permanent or acting chief executive officers over a 10-year period.
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