OWN CORRESPONDENT, Johannesburg | Friday 8.00am.
RECENTLY privatised local airline Sun Air will cease operations at close of business on Friday, after the parastatal South African Airways took a majority stake in the struggling airline. The company will be placed in liquidation immediately.
The unexpected move follows approval given on Wednesday by the Competition Board for SAA to acquire a 75% stake in Sun Air from empowerment groups Rethabile Consortium and the National Empowerrment Fund. The remaining 25% of Sun Air is owned by another local airline, British Airways/Comair.
Competition Board spokesman David Lewis said the board believed the South African market cannot support four domestic airlines. He added that the board accepted evidence that Sun Air was a failing company and that liquidation was in any case imminent. It is believed Sun Air ran up huge debts after its privatisation last year, and has been running in the red for some months.
Meanwhile, industry sources have expressed concern at the sudden closure, accusing SAA of building a monopoly. The closure is also likely to give additional ammunition to those apposed to government’s privatisation programme. The Airline Pilots’ Association condemned the closure, saying the sellers apperaed to have been “lured by quick commercial gain into selling Sun Air into hostile liquidation”.
Meanwhile, SAA says it will honour all confirmed Sun Air tickets, and will schedule flights to cover Sun Air destinations. The airline added that it will also interview Sun Air employees for positions currently open at SAA.