South Africa hires management firm Bain & Company to save country’s airlines
As South Africa looks to making inroads in turning around the dwindling fortunes of its airline sector, it has hired Boston based Bain & Company to advise on the strategy and corporate structure of the country’s three loss-making state-run airlines to improve the benefit to the state from owning the carriers.
Bainwas awarded the contract as part of a joint venture with a South African company, Abacus Advisory, according to a posting on the National Treasury’s website. The contract was awarded in October for a three-month period, a spokesman for the Treasury said in emailed comments on Monday.
South Africa’s government is seeking advice on the corporate structure of South African Airways and South African Express, which could lead to the sale of a minority stake in the airlines and the disposal of assets that aren’t central to their businesses, according to a separate invitation-to-bid document. The state is also seeking advice on how to improve their financial performances, reduce risk and develop a “well-co-ordinated strategy”, the document shows.
Both SAA and SA Express are surviving on state debt guarantees at a time when the government is trying to rein in spending and raise revenue amid slowing economic growth. The cabinet approved a new board for Johannesburg-based SAA on August 31 to overhaul management of the airline, which hasn’t made an annual profit since 2011. The carrier said last month it presented a corporate plan to the government that indicated a return to profit in 2021.
Ratings agencies, including S&P Global Ratings, which is due to deliver revised assessments on South Africa’s debt in the next two weeks, have identified the country’s state-owned companies as a risk to the fiscus. Reforms of government companies is one of the items that Fitch Ratings wanted to be briefed about in a visit to South Africa last week, Deputy President Cyril Ramaphosa said following the meetings.
