Roger Makings JOHANNESBURG Although South African Airways (SAA) has chosen Swissair as its strategic equity partner, the airline says it is in no rush to join the European Qualiflyer alliance or any other grouping.

SAA chief executive Coleman Andrews says the airline will keep its options open for as long as Swissair allows it to. Swissair says it has no intention of pressing SAA to join Qualiflyer.

In July, Swissair acquired a 20% stake in SAA for R1.4 billion ($228 million), effectively giving SAA a value of R6.9 billion in what appears to have been a two-horse race between SAirGroup and David Bonderman's Fort Worth, Texas-based Pacific Group.

The Lufthansa/Singapore consortium withdrew from the bidding before the deadline for the submission of final bids, but refused to elaborate on the reasons. Sources close to Lufthansa, however, believe the German carrier "just couldn't see a return on its investment". A fourth bidder, American Airlines, had announced only a few days before a commercial partnership with Swissair, effectively taking it out of the final bidding.

Andrews says the SAir Group's offer was based on a bold, comprehensive plan to add value to SAA over many years. "Swissair is in it for the long haul and wants to assist our development on several fronts," he says. The upfront cash payment, which goes to ailing parent company Transnet, may also have been a strong consideration. Transnet registered a loss of R426 million for 1998/9.

The European carrier has promised to send 15 widebodies a year to SAA's technical facilities, for intensive maintenance, and to train up to 10 executives and 50 middle managers a year.

The SAir Group will also help SAA to obtain reduced interest rates on loans and assist in negotiations with Airbus and Boeing for cheaper aircraft.

Andrews says that, with Swissair's assistance, he hopes within 12 years to have expanded SAA's technical division to accommodate two Boeing 747 and two Airbus A330/A340 maintenance lines. He says the deal will not compromise ties between SAA and Lufthansa.

The Swissair alliance will help SAA consolidate relationships in Asia and North America and improve its competitive position in Europe, Andrews adds. SAir Group chief executive Phillipe Bruggisser says the deal transforms the combination of SAA, Swissair and the other Qualiflyer airlines into the strongest alliance in Africa.

Source: Airline Business