Virgin Atlantic Airways has abandoned plans to revive failed South African regional carrier Sun Air, but is chasing a tie-up with another regional, Nationwide Airlines, after winning a weekly frequency to Cape Town ahead of UK rival British Airways.
Virgin already flies to Johannesburg and had codeshared on Sun Air services until the carrier folded. South African Airways (SAA) had planned to buy the regional and close it, but local concern over the move presented an opening for Virgin to launch a takeover bid.
The UK airline's regional general manager, Mackenzie Grant, says that due diligence failed to reveal the full extent of Sun Air's liabilities. "This led us to the conclusion that it would be unlikely if a return on any investment could be made," he says. "We would only expect a small profit, but even that appeared highly unlikely."
Grant reveals that Virgin is pursuing a deal with Nationwide instead. "We are talking to Nationwide with regard to codesharing and interlining and expect agreement to be reached within two weeks," he says.
Although an agreement with Nationwide is unlikely to include investment from Virgin, the European carrier confirms that it is exploring the possibility of setting up an all-new regional in South Africa. Grant argues that there is a lack of capacity on many trunk routes, and says: "Talks are taking place between certain parties," with an announcement on "a new domestic carrier" due in "a very short time".
Some sources say Virgin is discussing the formation of a new airline with SAA and a black empowerment group. BA has a regional presence in South Africa through its Comair subsidiary, which also held 25% of Sun Air.
Source: Flight International
