SAA revives technical unit strategic partner search


State airline South African Airways (SAA) has published a request for bids (RFB) for consultants to advise it on the restructuring options for its maintenance and repair wing, SAA Technical (SAAT).

The Engineering News this morning notes this could, “eventually”, lead to the introduction of private equity partners at the unit.

The engineering journal says the idea of a strategic equity partner for the SAA subsidiary has been around since April 2000 when SAAT was set up as a separate company. “However, there have been several false starts since then, despite initial indications that a sale was likely during 2008.”

In the intervening period, the maintenance repair and overhaul (MRO) division has been actively seeking to expand its third-party customer base, so as to decrease its reliance on SAA, which remains a key client, the Engineering News adds.

That diversification strategy has seen it offering services to Comair and Kulula, Mango, Virgin Nigeria, Iberia, Air Seychelles, Air Malawi, Lufthansa and British Airways. But it has continued to have surplus capacity for most of the period since 2000.

SAA spokesperson Vimla Maistry indicated to Engineering News Online that the tender formed part of a process of unbundling the business unit, which itself formed part of the broader restructuring of the State-owned airline, which began in May 2007. “This is the first phase in determining how SAAT, as one of our prime businesses, can be further optimised. It will also assist in determining the most appropriate equity partners for the subsidiary, if [such an option is] found necessary,” she added.

SAA was “on track” with the analysis of its other seven “standalone subsidiaries”, and it was possible that equity partners could also be introduced at some of these.

The specific RFB for the SAAT unit, which was published over the weekend, indicates that SAA will consider bids only from those consultants with aviation industry experience, and which have also advised companies with revenues of R1 billion or more.

The tender notice also stipulates that the consultancy should have been involved with at least two similar MRO “engagements”, but that it should not be part of any group that includes MRO service offerings.