Business Maverick: South Africa Starts Talks With Potential Buyers of State Airline

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South Africa’s government has started talks with private entities interested in buying into the country’s insolvent national carrier, which needs at least 10 billion rand ($583 million) to resume operations.

A team from the Department of Public Enterprises and advisers from FirstRand Ltd.’s Rand Merchant Bank began negotiations after receiving as many as four promising proposals regarding South African Airways, according to Kgathatso Tlhakudi, the DPE’s director general. The state ideally wants SAA to resume operations by the year-end, he said in an interview on Wednesday, although much will depend on a pick up in demand amid the Covid-19 pandemic.

While Tlhakudi declined to identify SAA’s suitors, the government has said previously that approaches have been made by private-equity firms and potential aviation partners. Ethiopian Airlines Group, Africa’s largest and only consistently profitable carrier, has in the past said itSAA has been in administration since December and hasn’t flown a commercial passenger flight since March, when South Africa’s borders were closed to help contain the coronavirus.

“That proved to be a very good model for Telkom as it brought into the company management discipline and the important discipline of delivering a product on time to the market,” Tlhakudi said.Airlines around the world have been hammered by travel restrictions to contain the Covid-19 pandemic, with many, including Deutsche Lufthansa AG and Air France-KLM, needing billions of dollars in government bailouts.

SAA’s administrators agreed with the government and labor groups to cut the workforce to about 1,000 employees from more than 4,000, and that process should be completed by the end of September, Tlhakudi said.

 

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