In a letter to trade union Solidarity, and released by the union at a media briefing on Tuesday, South African Airways (SAA) CEO Vuyani Jarana has given a number of assurances about the plans for the future of the beleaguered State-own national flag carrier. The letter followed a meeting between teams from Solidarity and SAA early last month, a meeting described by Jarana in his letter as “fruitful”. As a consequence, the union has decided to suspend its application for business rescue for the airline. (The union also released a letter its CEO, Dr Dirk Hermann, had previously sent to Jarana.)
One of the key assurances, in the eyes of the union, is that the partial privatisation of the airline is being considered. Furthermore, Jarana agreed with Solidarity that it was “desirable” for a future strategic equity partner to bear most responsibility for the recapitalisation of the airline, although he cautioned this would depend on the share of the airline that was sold, the value put on that stake, and the structure and timing of the transaction.
“The government of South Africa has pronounced that there must be private sector participation in the ownership structure of SAA,” wrote Jarana. “The shareholder and the board of SAA have agreed to commence the process of a strategic equity partner (SEP) for SAA. … We can project the start of the process however we cannot guarantee whether there will be appetite in the market. We therefore would not be able to commit to [a] deadline for completion of the SEP process, it depends on the market. … It is the belief of management that getting SAA into shape first is an important step in making SAA attractive to potential Strategic Equity Partners. However given the pressure to fund SAA, the Shareholder, the Board of SAA and management have agreed to commence the process immediately.”
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