South African Airways Stake Sale Favored in Quest for ProfitMike Cohen, Amogelang Mbatha and Kamlesh Bhuckory
South Africa will search for potential buyers for an equity stake in South African Airways SOC Ltd. as the government seeks to return the national carrier to profitability.
“We will have to go to the market to see what the appetite is,” Public Enterprises Minister Lynne Brown told reporters in Cape Town yesterday. No preferred partners have been identified and the size of the stake that could be put up for sale hadn’t been determined, she said.
South Africa disposed of 20 percent of SAA, as the airline is known, to Swissair in 1999 and bought the shares back in 2002 after the Swiss carrier went bankrupt. The government will raise at least 20 billion rand ($1.8 billion) by selling shares in listed companies, stakes in state-owned entities and real estate to finance a bailout for power utility Eskom Holdings SOC Ltd., Finance Minister Nhlanhla Nene said Oct. 22.
SAA is now “technically bankrupt” and surviving off state-guaranteed loans because its applications for government grants had been turned down by Nene, Brown said. The carrier has delayed the publication of earnings for the 12 months ending March 2014. The company made a 991 million-rand operating loss the previous year.
Brown announced a boardroom clear-out yesterday, accepting the resignations of six members who she said quit because they knew they were going to be fired. They weren’t identified.
Chairwoman Duduzile Myeni was retained in her post, while John Tambi, an air-transportation specialist, and Anthony Dixon, an accountant, were appointed and approved by the government after two board meetings.
The old board was split into factions, divided and “collectively just didn’t work,” Brown said.
SAA has had four chief executive officers in the past two years as different management teams failed to turn the airline around. Present incumbent Monwabisi Kalawe was appointed in April last year.
The carrier wants to replace its aging fleet of long-haul aircraft with new Boeing Co. and Airbus Group NV. models and has named KPMG LLP to advise on the process. A lack of money has delayed the purchase of the new aircraft, Brown said.