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South Africa sells majority stake in collapsed flag carrier

South Africa plans to sell a majority stake in its collapsed flag carrier to local investors in the first privatization of a sick state-owned enterprise since President Cyril Ramaphosa came to power in 2018.

The Ramaphosa government announced on Friday that African infrastructure investor Harris General Partners and local airline Global Aviation account for more than 51% of South African Airways.

Once the largest airline on the continent, SAA needed tens of billions of rand bailouts to survive in recent years, straining South Africa’s finances during the secular stagnation of Africa’s most industrial economy. It was.

“The new SAA will be Fiscal-independent. It will be agile enough to deal with the current uncertainties and improvements in world travel,” said Pravin Gordan, Minister of State-owned Enterprises. ..

The government holds the remaining 49 percent of the SAA. The airline will hold one-third of the golden shares of voting rights that also apply to “certain areas of national interest.”

Investors are planning to list new airlines “as one way to address future funding requirements and allow all South Africans to participate in their success,” the consortium said. Stated.

Investors will face the major challenge of turning around the SAA, which has a history of political interference from the ruling African National Congress.

SAA made its final profit in 2011, before increased debt forced South Africa’s bankruptcy alternative business bailout at the end of 2019.

The pandemic and restrictions on travel to South Africa have supported most of the airlines over the past year. SAA emerged from business administration just a few weeks ago.

Once the largest airline in Africa, SAA has been obscured by a new generation of national airlines connecting the continent and the world, especially Ethiopian Airlines and Gulf rivals.

SAA also struggled to compete with low-cost carriers in the country, including one of the world’s busiest routes between Cape Town and Johannesburg.

The airline eventually succumbed to a decade of corruption, transplantation and interference over the route under former president Jacob Zuma, a long-term judicial inquiry said. Zuma denies cheating.

Gidon Novick, head of the consortium that purchases SAA, said:

Global Aviation recently launched Lift, a budget domestic airline in South Africa. Among them, Novick is a co-founder.

As part of the consortium, Harris owns Lanseria, Johannesburg’s second international airport after the main OR Tambo Hub.

This week, Ramaphosa also has room to produce its own electricity outside the Escom electricity monopoly as another sign that South African companies, including miners, are becoming more motivated to work on inefficient state-owned enterprises. Announced that there is.

South Africa sells majority stake in collapsed flag carrier

Source link South Africa sells majority stake in collapsed flag carrier

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