South Africa Government, Labor Working Together on New Airline Plan

(Bloomberg) -- South Africa’s Public Enterprises Department and labor unions are working together on a business model for a new national carrier that will replace the embattled South African Airways.

The new airline will be funded through a variety of options such as strategic equity partners, funders and the sale of non-core assets, the Ministry of Public Enterprises said in a statement Wednesday. The parties are still of the view that the state must continue to play a role.

The administrators running SAA had proposed firing the entire workforce to stave off liquidation after a request for state funding was rejected in April. However, Public Enterprises Minister Pravin Gordhan strongly objected to that plan and announced his ambitions for the creation of a new airline.

The administrators are now proposing the government provide a 21 billion rand ($1.2 billion) bailout to help repay debt and resume operations after the lifting of Covid-19 travel bans. President Cyril Ramaphosa reiterated the government’s intention to revive SAA on May 31, saying he sees a bright future for the carrier.

“It is essential to build a leadership coalition which is robust and strong enough to find solutions, and establish the foundations of a new airline with a growth path,” the Ministry said on Wednesday

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