The government has received “unsolicited proposals” from private sector funders, private equity investors and potential airline partners for a new South African Airways (SAA), the Department of Public Enterprises (DPE) said in a statement on Tuesday.
SAA is currently under business rescue. Last week, its business rescue practitioners (BRPs), Les Matuson and Siviwe Dongwana, released a plan that envisages the establishment of a “restructured airline.”
DPE said, “Government is intent on pursuing credible proposals for investment and strategic partnerships with the private sector as well as equity participation for employees. Such partners will also introduce technical, financial and operational expertise.
“As the shareholder on behalf of [the] government, DPE will engage interested parties constructively in pursuit of government’s national developmental and strategic agenda to rebuild our economy in a post-COVID-19 era.”
‘Viable national carrier’
The government is intent on restructuring and transforming SAA into a “viable, sustainable and competitive national carrier,” DPE added.
This new airline should have “no legacy financial and operational issues” and should be managed by competent people with technical expertise, according to the Department.
The news comes as the SAA business rescue process faces legal challenge from privately owned regional airline Airlink, which wants an interdict against a creditors’ meeting that is set to vote on the BRPs’ plan.
The meeting is scheduled for Thursday (25 June), while the court case will be heard on Wednesday. Both DPE and BRPs are opposing the application.
Airlink argues that the plan benefits DPE to the disadvantage of concurrent creditors, including Airlink. It wants the entire process set aside and SAA placed in provisional liquidation.
The Democratic Alliance (DA) has also opposed the plan, which it claims would require a R32.65 billion bailout from the government.
However, DPE said it was committed to the formation of the new airline as envisaged in the plan. This airline should have characteristics such as an efficient and modern aircraft fleet and an offering with the “right routes, at the right times and at competitive prices.”
Other characteristics include a motivated workforce, a customer-centric airline, and an “effective, competent and empowered board of directors with appropriate aviation experience.”
It’s unclear at this stage what form of ownership the new airline would take once private participation is onboarded. The African National Congress (ANC) and its alliance partners have insisted on majority state ownership and control at all times.