THE decision by Switzerland?s SAirGroup not to increase its 20% holding in South African Airways (SAA) could dent confidence in the privatisation programme of President Thabo Mbeki’s government at a time when South Africa needs foreign investment to drive post-apartheid reforms, say analysts.
SAirGroup announced this week it would no longer make investments or acquisitions in the airline sector after Chief Executive Philippe Bruggisser stepped down. SAirGroup said it might also sell some or all of the minority stakes it holds in foreign airlines, depending on an assessment of the risks involved.
Richard Meichtry, SAirGroup’s vice president, said the 20% stake in SAA, Africa’s largest airline, would be subject to a review following its shift away from its strategy of buying stakes across the airline sector.
”The SAA participation will be evaluated along with all the other stakes that the SAirGroup holds,” he said.
”This is certainly negative news, but it is possible that it could bring other investors on board,” Karen Hesse, an analyst at BusinessMap, said.
SAirGroup’s Bruggisser, who also sat on the SAA board, was the driving force behind the ”hunter strategy” of buying stakes in foreign airlines and weaving them into the Swissair-led Qualiflyer alliance.
SAirGroup’s Meichtry said that although the group was freezing airline sector investments, SAA remained among the group’s sound investments in the sector.
SAirGroup is the parent company of Swiss flagship airline Swissair. It bought a 20% stake in SAA in 1999 for R1.4bn from South Africa’s transport utility Transnet.
It also paid R48m for a one-year option to take up an additional 10% of equity for R700m in SAA. The exercise period for the option was extended to February 19, 2001, from November last year.
Meichtry said the Swiss group also intended to arrange a meeting ”in due time” between SAirGroup Chairman Eric Honegger and his SAA counterparts to clarify SAirGroup’s position on SAA.
Last month SAA reported a net profit of R289m in the six months to September 2000.
Mbeki’s government is also preparing SAA for a 2002 initial public offering, which industry analysts expect to fetch close to R3bn through the listing of a 20%-30% stake. – Reuters