/ 27 November 2000

Swissair’s SAA option extended

OWN CORRESPONDENT, Johannesburg | Friday

THE South African government has given Swissair until February next year to exercise its option to acquire a further 10% stake in South African Airways (SAA).

”The South African government, Transnet and Sairgroup have agreed to extend this option for a period of three months, and this option would expire on 19 February, 2001,” the Department of Public Enterprises – charged with the restructuring of state-owned utilities – said in a statement.

Swissair’s parent firm SAirgroup bought a 20% stake in SAA from South African transport utility Transnet for R1.4bn last year. It also paid R48m for a one-year option to take up an additional 10% equity for R700m.

Industry sources had expected Swissair to exercise its option this month, but the statement added that the extension of the deadline would allow the parties to further consolidate their relationship before any further deal was reached.

”Both SAirgroup, Transnet and the South African government are confident that an agreement will be reached within the above time frames, thereby positioning SAA for further growth,” the statement said.

Transnet – together with power utility Eskom, defence group Denel and telecoms utility Telkom – form the basis of President Thabo Mbeki’s privatisation blueprint.

The utilities have an estimated combined value of R150bn and are scheduled for restructuring and partial privatisation by 2004. Transnet, the majority shareholder of SAA, plans to offer another 10% in the domestic carrier to black empowerment groups.

Transport industry sources have said Mbeki’s administration could consider listing SAA on the Johannesburg and London stock exchanges once it felt the airline’s turnaround was firmly on track.

SAA had been hit by years of losses until 1998 when it implemented a new turnaround strategy that helped the carrier to raise its profits in the year to March 31, 2000, to R350m from R51m in the previous year.

The performance of SAA – Africa’s largest air carrier – had been stung by years of international sanctions for the country’s policy of apartheid. – Reuters