South Africa’s Comair to bid for Air Botswana

Botswana on Monday once again put its national carrier up for tender as part of a strategy to privatise loss-making state companies. Comair’s Chief Executive, Erik Venter said the South Africa airliner will submit a proposal to Botswana to take over Air Botswana.

Comair, which operates British Airways in Southern Africa alongside its no-frills brand Kulula.com, has vied for Air Botswana before. However, in 2008 it pulled out of a bidding round that failed to attract successful suitors.

Venter told Reuters;

“We’ll make a submission and see if they are interested in our approach,” adding that proposals had to be made before the end of February.

Botswana’s transport department has said it is open to proposals on various forms of privatisation including joint ventures, ownership, franchising and concessions. Venter said Comair wants equity in and control of the airline that connects four Botswanan cities to South Africa.

“We’d even look at a management contract, but it would have to be on the basis that we run a large amount of it from Comair to get economies of scale,” he said.

Over the years, Air Botswana, which provides cargo and air passenger services to Cape Town and Johannesburg from Gaborone, Francistown and the tourism hubs of Maun and Kasane, has been a drain on state finances. Financial losses, blamed on a large workforce and an ageing fleet, have prompted a five-year turnaround plan that includes cutting costs and cancelling unprofitable routes.

“It needs economies of scale and a small airline on its own is never going to achieve that.” – Venter.

He further said a takeover would mean moving some of the airline’s services to Johannesburg. Air Botswana, which recently discontinued flights to Harare and Lusaka from Gaborone, halved its operating losses to 83 million Pula ($8 million) in the 2016 fiscal year.

Venter thinks the airline is unlikely to attract cash offers from suitors.

“I don’t think there is any money involved in this one, to be honest. We wouldn’t pay for it, that’s for sure.”

Venter said Comair is also looking for other acquisitions but didn’t provide further details. Chief Financial Officer, Kirsten King told Reuters in a separate interview that Comair has as much as 1 billion rand ($77 million) available for acquisitions and other projects.

Comair shares rose more than 17 percent to a 23-month high of 5.95 rand on Tuesday after the firm announced a South African court awarded it more than 1 billion rand in an anti-trust dispute with South African Airways.

Reference: af.reuters.com

10 months ago