BOEING and South African Airways (SAA) are continuing discussions over the amount and method of paying offset counter-trade payments attached to the airline's $960 million order for seven Boeing 777-200s and two 747-400s, six months after the deal was signed in November 1995.
Concern has been growing in South Africa over the Government's involvement in negotiations to increase the amount of offset, with local newspaper reports suggesting that the order may now be in jeopardy. Boeing and state-owned SAA deny the claims, and South African Minister for Public Enterprises, Stella Sigcau, who signed the original order, is understood to have issued a statement saying: "There is no possibility that the deal will be scrapped."
She confirms, however, that "...a variety of technical matters are still under discussion", including offset payments and the choice of engines for the 777s.
The Government's requirement for offset is one of the factors delaying SAA's selection of an engine, a problem which has already put back production and delivery of the first 777s to the airline (Flight International, 1-7 May, P9).
The original offset requirement is believed to have been set at 80% of the order's value, but the Government is understood to have accepted a Boeing offer to pay $110 million in cash and provide training. The Government, which insists on offset payments with all import deals, plans to increase such requirements to 90% by 1998.
Source: Flight International
