Vol.21 No.16

Monday 2 February 2004    

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Business Week
Comair Pull-Out Stalls AB Privatisation Process

Kabo Mokgoabone and
Prof Malema

2/1/2004 11:01:52 PM (GMT +2)

Air Botswana (AB) has plunged into crisis as the planned privatization of the national carrier collapsed following the pulling out of the South African-based company, Comair Limited from the race.


Comair, has been in a one-horse race following the withdrawal of Air Mauritius in September last year.

The South African airliner gave the Botswana government a pre-Christmas shocker when it announced the surprised withdrawal at a time when confidence was building up that AB would be the trail-blazer in the privatization initiatives.

However the Ministry of Works, Transport and Communications only released the information late Friday after all the major newspapers had closed for the week - despite repeated attempts by the press to get a comment from them over the past two weeks.

"The tender for the sale of 45 percent of Air Botswana (AB) to a strategic partner has been temporarily suspended. This is due to the withdrawal in December of Comair Limited, the last pre-qualified bidder remaining in the process," the statement read.

It added: "Despite these difficult market conditions, the government remains committed to completing the privatization of Air Botswana. Although the tender process as presently structured has been temporarily suspended, the government continues to explore other options.

"We are working with our advisors to develop an appropriate strategy to complete the privatization of the national carrier," PS in the Ministry of Works, Nyadze Thipe said.

However, he blamed Comair's latest decision on the economic downturn in the global airline industry which was made worse by the effects of the US war on terror. But, serious doubts over the viability of the AB privatization were raised shortly before the due diligence process began as some of its aircrafts were grounded due to mechanical problems.

Some critics said the balance sheet for the airline and the market were suspect - as they are influenced by the non-core activities of AB such as the BoBCs - and at the same time the profits were heavily influenced by government expenditure. Government is currently embarking on cost control measures, which are likely to impact negatively on the future revenues of the airline.

The sad Friday announcement will mean that the tiny airline, which has four aircrafts, will have to go back to the drawing board to try to revive the spirit of privatization. The move will include detailed study on the valuation, time frame for re-advertising to potential bidders and going through the same long process once again.

The embarrassment might mean that the airline's privatization will have to be given to the Public Enterprises Evaluation and Privatization Agency (PEEPA) to spearhead the process - a move that the ministry has fiercely rejected before.

Under the plan the strategic partner was to get 45 percent - in a bid to conform with the international standards if the airline was to keep the name - and 10 percent was to go to the employees while the remaining shares were to be held by government in trust and later be floated on Botswana Stock Exchange as a form of citizen empowerment.

The airline has got a total staff compliment of about 200 people and flys limited regional routes, including Gaborone - Johannesburg, Harare and Windhoek. Send us your comments about Mmegi newspaper Search For Old Newspaper Editions To advertise contact us through email

 
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