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SAA Goes Boeing - Domestically At Least

Fri Feb 25, 2000 11:17 pm

From Business Day 24/02/00:

The South African Airways (SAA) board of directors had made a unanimous decision earlier this month to purchase its domestic aircraft from Boeing, the US-based aerospace company, Rainer Mieir, a spokesperson for Swiss airline group SAir, said on Thursday.

"The SAA board has made a decision that it is in the best economic interests of the airline, and we hope that this decision will be ratified by the Transnet board," said Mieir.

Boeing and Airbus Industrie were competing aggressively to secure an order of about R4,3-billion to replace SAA's domestic fleet. The announcement over the successful supplier had been delayed for several weeks, ostensibly for Transnet and SAir to ratify the deal.

Transnet said a formal announcement over the successful supplier would be made next Tuesday after an SAA board meeting on Monday.

SAir holds a 20 percent stake in SAA and has an option to purchase a further 10 percent by November this year. Press reports suggested that SAir was threatening to withdraw from SAA because of what it perceived to be government involvement in the bidding process.

Jeff Radebe, the minister of public enterprises, held discussions late on Thursday with Phillipe Bruggissier, SAir's chief executive and a member of SAA's board, and both had agreed on the new acquisition. Radebe said the approval process at Transnet would run its course.

Louise Tager, the chairperson of Transnet, said: "SAA's articles and the shareholder agreement between SAir and SAA dictated that the raising of finance ... in the amounts required to complete the aircraft acquisition has to be ratified by each of the shareholders."

She added that the department of public enterprises had declared the purchase an SAA matter because it was a commercial issue and imposed no restrictions on the board.

Each of the aircraft manufacturers had offered counter trade proposals to the government that would be worth 30 percent of the sale price in terms of local import regulations.

Saki Macozoma, Transnet's managing director, said once the offsets were proved to be worth 30 percent of the sale price, they became less of an issue in determining the supplier.

"If the economic considerations of the two offers are exactly the same, then the offsets can swing the deal either way. But if one commercial deal is favourable, we would go for it even if the offset was not quite as good as the other."

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RE: SAA Goes Boeing - Domestically At Least

Sat Feb 26, 2000 2:16 am

So the SAir group selected boeing. How many aircraft will they order?

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RE: SAA Goes Boeing - Domestically At Least

Sat Feb 26, 2000 3:14 am

No, SAir Groupe did not select these aircraft. They did however give them their blessing...

"Swissair has renewed its fleet with an all-Airbus fleet. We don't have any Boeing aircraft, except for MD-11s. We are very close to Airbus. Even so, for SAA's development, the offer by Boeing is a better one and we support it."

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RE: SAA Goes Boeing - Domestically At Least

Sat Feb 26, 2000 3:28 am

Wow. Maybe now that Airbus' possible pending privatization may actually occur sometime in this millenium, they are not quite as aggressive in their pricing (having to answer to shareholder and whatnot). Or maybe the fact they have a fat order backlog has satiated their appetite for awhile. I personally think it will be great to see some new Boeings at SAA.
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RE: SAA Goes Boeing - Domestically At Least

Sat Feb 26, 2000 4:21 am

It is good to see that the holding group has given the airline freedom to make aircraft purchase decisions as they see best. I had great respect for SAA in the old days, and I am really glad to see them return to their former glory.

A modern domestic fleet based on the 737, 738, will serve them very well. The 737NG is a rugged and reliable airplane well suited to the extreme environment of southern Africa.

As and added bonus, I will look forward to seeing these planes in the spectacular SAA livery.


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