South African Airways officials will be summoned to a meeting with regulators next month to disclose details about talks with potential equity partners and give assurances that any deal won\u2019t violate foreign-ownership laws.<\/p>\n
Under the Air Services Licensing Act of 1990, airlines must be at least three-quarters owned by South Africans to operate a domestic service.<\/p>\n
That would prevent international operators from buying more than a 25% stake from the government, unless the rules are changed.<\/p>\n
“We are going to be calling SAA to next month\u2019s meeting to share with us what their plans are,” said Mike Mabasa, chairman of the Air Services Licensing Council, which regulates domestic aviation within South Africa.<\/p>\n
“If they are already in conversations with strategic equity partners we need to know what that entails.”<\/p>\n
Finance Minister Tito Mboweni said last month the government is talking with potential investors in SAA, which is technically insolvent and reliant on bailouts and other forms of state support to survive.<\/p>\n
The carrier last week triggered a plan to cut 944 jobs to reduce costs — leading to an ongoing strike that started on Friday.<\/p>\n
Two labour groups on Sunday said they are consulting with workers about intensifying the strike across the aviation industry after failing to reach a deal over wage increases and job cuts at the weekend.<\/p>\n
The National Union of Metalworkers of South Africa and the South African Cabin Crew Association argue that ending the outsourcing of services would help reduce costs.<\/p>\n
\u201cIt is clear to us that the management of SAA is not prepared to do what is necessary to save the airline,\u201d they said in a joint statement.<\/p>\n
Investor Interest<\/strong><\/p>\n Ethiopian Airlines Group Chief Executive Officer Tewolde Gebre Mariam has said the continent\u2019s biggest airline would consider taking a stake in SAA, a partner in the Star Alliance.<\/p>\n Virgin Atlantic Airways Ltd. founder Richard Branson has also indicated an interest.<\/p>\n \u201cIf some tough decisions need to be made, we\u2019ll make them,\u201d Public Enterprises Minister Pravin Gordhan said on Thursday.<\/p>\n He\u2019s previously said the company will need to remove unnecessary costs to attract a viable buyer.<\/p>\n Routes to some international destinations including London and New York are due to resume Sunday night.<\/p>\n SAA\u2019s ongoing battle with unions may prove decisive to the carrier\u2019s survival, with an estimated R50 million ($3.4 million) of losses incurred with every day of strike action, and little in the way of leeway in terms of cash reserves.<\/p>\n Labour groups are demanding a reversal of the plan to reduce the workforce by about a fifth on top of an 8% pay rise and other employment benefits.<\/p>\n “SAA pretends as if its service is indispensable, which is not the case,\u201d because it has just a 20% market share, and other carriers can step in in the event of its demise, said Gerhard Papenfus, chief executive officer of the National Employers\u2019 Association of South Africa.<\/p>\n “This notion of indispensability, however, emboldens the trade unions to make unrealistic demands.”<\/p>\n Tlali Tlali, SAA\u2019s spokesman, didn\u2019t answer calls to his mobile phone seeking comment.<\/p>\n
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