Branson says he is open to buying stake in SAA
Richard Branson, the founder of Virgin Atlantic who is hoping to fly tourists to space in 2020 through his newly listed venture, says his airline would be open to considering buying an equity stake in struggling SAA.
“I have great difficulty in life saying no,” the British billionaire said in an interview on Thursday. “I’m known as Dr Yes at Virgin, so if we were approached by the SA government, we’d definitely have a look.”
SAA, one of the state-owned enterprises that was wrecked during a decade of state capture, received another bailout during finance minister Tito Mboweni’s medium-term budget policy statement in October, when the government said it would repay R9.2bn of debt that the company could not roll over because banks would not fund it.
The airline has accumulated R28bn in losses over the past 13 years, according to the Treasury with Mboweni, who previously advocated shutting it down, saying it was unlikely to generate enough cash to sustain itself in its current form.
While analysts have questioned whether outside investors would have any appetite for acquiring a minority share in SAA, leaving them powerless to direct strategy and make leadership changes, Virgin Atlantic is not the only company that has said it might be interested. Ethiopian Airlines CEO Gebre Mariam told Bloomberg in October that his company would be interested in “supporting” SAA if asked by the South African government.
“Whether it made sense for Virgin Atlantic to do something, then we’d obviously have to see,” said Branson, who was in Johannesburg for a business event co-hosted with Investec.
The entrepreneur, who left school at 16 and started businesses in sectors from railways to financial services, gave an endorsement of President Cyril Ramaphosa, just a day after the government announced that its second investment drive had attracted pledges worth up to R371bn.
“It’s a good time to invest in SA. Now you’ve got someone leading the country who is trustworthy, you have the basis hopefully for a really positive future,” Branson said.
Virgin Atlantic wanted to reintroduce flights between London and Cape Town once Heathrow’s third runway had been completed and it was able to secure more slots, he said.
It also wanted to open routes to Nairobi, Addis Ababa and Accra.
If we can get a slot earlier, then we d fly much earlier,”
Branson said, adding that Cape Town, SA’s premier tourist destination, would be highest on that list of African destinations. The airline, which operates 14 flights a week between Johannesburg and London, stopped Cape Town flights in 2015.
“In the airline business, there is a very thin dividing line between success and failure, so we’ve got to use our slots as well as we can”, and Cape Town lost out to more lucrative routes such as New York.
Branson’s Virgin Galactic became the first space tourism company to list when it went public on the New York Stock Exchange on October 28.
The company, which competes with Jeff Bezos’s Blue Origin and SpaceX, founded by SA-born Elon Musk, already had 7,000 people signed up for flights and another 5,000 on the waiting list, Branson said.
One of the UK’s best-known business people, Branson described the country’s 2016 vote to leave the EU, a decision he said directly led to the failure of a number of airlines, as “an utter disaster” for the country.
“It’s very, very sad for Great Britain, very sad for Europe and dangerously sad for democracy throughout Europe. I’m still a little hopeful that we’ll end up with a new referendum. We’ll have to see how the elections go” on December 12, he said.