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Looking for investors

New South African Airways to take off in 2021

South Africa is negotiating with investors regarding a re-launch of South African Airways. If the search turns out as successful, the airline could take off as early as 2021.

To restructure South African Airways (SAA) and re-launch it as a new, but smaller airline, more than 10 billion rand (US $617 million) were missing as of mid-July. At the time, the government promised to guarantee the financing in writing. It has now done so – but the money required has still not arrived at the airline.

In fact, the Ministry of State Enterprises made clear that the government itself will not put any more money into the airline. Instead, it has started a search for investors, and according to its own statements, the prospects are good: Last week, there were four promising expressions of interest in South African Airways. On Monday (August 24), the ministry stated that there are far more than ten offers for the airline and its subsidiaries Mango (low-cost carrier), Air Chefs (catering) and the maintenance division.

Is Ethiopian Airlines getting on board?

Among the potential investors are general investment as well as aviation companies. Names have not yet been specified. In the past, however, Africa’s largest airline, Ethiopian Airlines, had shown interest. If the search for investors is successful, the new South African Airways is said to start in early 2021, depending on how the situation surrounding the Covid-19 pandemic develops.

In mid-August, the administrators of SAA had warned that about half of the 10 billion rand are urgently required. The money is needed to pay off debt and secure liquidity. The company also has to make severance payments to employees who were forced to leave the airline.

Only 88 pilots instead of 625

Smaller South African Airways 2.0 will only have about 1000 employees. For comparison, the old one had 4700. Another 1000 employees will be prioritised for joining the new project once it is ready to hire more people. The remaining 2700 employees will receive severance pay. The number of pilots will decrease from 625 to only 88 for the time being.

Meanwhile, the government is suggesting SAA to go public in the future. A director of the Ministry of State Enterprises indicated to Bloomberg news that the procedure at Telkom SA could serve as a model. The once state-owned telephone company was first partly sold to investors and then brought on the stock exchange. The state now only holds a minority stake.

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