South African Airways' (SAA) order for seven Boeing 777s, which has been in limbo for nearly two years, is back in the spotlight following an offer by Rolls-Royce to invest in a repair centre in return for a firm deal to power the aircraft. The move comes as SAA is being prepared for the first steps toward privatisation.
SAA announced that Boeing had won the competition in November 1995, with a deal in prospect for seven 777-200IGWs and two 747-400s. Deliveries were due to start earlier this year and run through to 1999. An engine selection was expected shortly afterwards, pending satisfactory offset negotiations and state approvals.
Neither the 777 aircraft order or the engine order has been finalised, however, although it is widely known that the R-R Trent 800 has been selected in the internal engine-selection process.
R-R has now offered to invest in a centre in the East London district of the Cape as part of an offset package, in an attempt to kick-start the stalled engine decision. The plant would be a joint venture with the Eastern Cape Black Empowerment Consortium.
Sources in South Africa say that the final aircraft approval has been held up at board level within Transnet, the state-holding company to which SAA reports. The holding company, which has a new management structure in common with other post-apartheid state companies, is said to have spent considerable time reviewing the figures calculated by the airline in making its original selection.
In the meantime, SAA has missed delivery dates on the aircraft and has been forced to lease Boeing 767s and re-activate a 747SP as a stop-gap measure. Sources in South Africa put the cost to the airline at around R200 million ($42.5 million) a year, and there are also concerns that the aircraft may not be available before the turn of the century.
The aircraft order will have to be resolved as SAA moves towards privatisation. The airline is to be set up as a standalone company by next March, albeit under state ownership. A minority sale of shares to a foreign partner is expected to follow by October as the first step towards full privatisation.
Source: Flight International
