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Abu Dhabi, UAEWednesday 20 February 2019

South Africa to decide on airline rescue plan by year-end, minister says

Government studying whether airline should take on a strategic partner

South Africa Minister of Transport at the Global Investment in Aviation Summit in Dubai. The government is looking for ways to rescue the ailing airline.  Leslie Pableo for The National
South Africa Minister of Transport at the Global Investment in Aviation Summit in Dubai. The government is looking for ways to rescue the ailing airline.  Leslie Pableo for The National

South Africa's government will decide by year-end on a plan to keep its flag carrier from collapsing and is considering the option of a strategic partner to help turn around the troubled airline, the country's transport minister said.

South Africa is looking for sustainable solutions to rescue the state-owned airline and is studying the right model for taking on a partner, Blade Nzimande told reporters in Dubai.

"We committed that South African Airways is our national carrier to sustain so we must make a decision this year on how that will be, whether we’re going to have a partner or not," he said on the sidelines of an aviation conference.

An investor or aviation partner has long been touted as the solution to South African Airways' financial crisis but no candidates have been yet officially revealed. The cash-strapped national airline has been propped up by repeated government bailouts to continue operations and has recorded seven consecutive years of losses. It aims to return to profitability by 2021 through a turnaround plan that includes cutting jobs and routes.

The government is studying the structure for the airline's partnership, including the size of a potential stake to offer, but no decisions have been made yet, the minister said.

He declined to comment on alternative options the government is exploring to rescue the ailing airline.

"We have to look at the sustainability of the airline, whether that involves taking on a partner or not, and if we get a partner what is it that we’re offering," he said.

The troubled South African carrier has more than 9 billion rand (Dh2.39bn) of debt and is a major concern for President Cyril Ramaphosa’s government, which is battling to ease the debt burden of state-owned companies on public finances.

South Africa is seeking $3bn in investments into its aviation sector, the minister said at an industry presentation in Dubai. The country is looking to raise $100bn overall in new investments into its economy over the next five years, of which it has secured $20bn in pledges.

In December, Dubai-based Emirates and South African Airways agreed to expand a codeshare partnership and explore other areas of bilateral co-operation in a boost to SAA.

The expanded commercial partnership will see the two airlines leverage one another's route networks, cargo services and flight schedules to increase passenger flows.

Updated: January 30, 2019 11:33 AM

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