By Nicol Degli Innocenti in Johannesburg Published: January 24 2001 19:50GMT | Last Updated: January 24 2001 20:00GMT Alitalia, the Italian flagship carrier, Austrian Airlines and Sabena, the Belgian airline, are to end their services to South Africa, the airlines said on Wednesday. Flights will stop by the end of March and will mark a further abandonment of the route by large airlines. SAir Group, parent of Swissair, may be disinvesting from South Africa. The Swiss group owns 20 per cent of South African Airways (SAA) and it has an option to buy a further 10 per cent. Following the resignation of Philippe Bruggisser, the chief executive who was the prime mover behind the Swiss airline's investment in South Africa, the group is now rethinking its international strategy. Eric Honneger, the new chief executive, said there would be no further investments but added that he needed time to consider whether to take up the option to increase Swissair's stake in SAA. However, an industry source said on Wednesday that not only would Swissair not buy a further 10 per cent of South Africa's national carrier, as it is not willing to spend the R700m ($89m) required, it would actively try to dispose of the 20 per cent it bought in 1999 for R1.4bn. "It is seen as a dead weight," he said. But selling Swissair's stake in SAA might prove to be very difficult, analysts say. This is partly because the South African government, SAA's main shareholder, has the last word on buyers, and partly because the airline is seen as less than financially healthy. SAA posted a profit last year, but analysts say this was mainly achieved by selling assets. Fani Tutu, spokesman for the Public Enterprises ministry in Pretoria, said on Wednesday that the government was concerned with Swissair's change in strategy and was seeking an urgent meeting with the Swiss group. "We have to understand where they are going," he said. Swissair's decision may also have a negative effect on the privatisation of SAA, due later this year. SAA is now trying to step into its departing European competitors' shoes. It is negotiating with government to secure the subsidies necessary for it to start direct flights from South Africa to at least one of the destinations Sabena, Alitalia and Austrian Airlines will leave unserviced. The persistent weakness of the local currency, the rand, coupled with the increase in the price of fuel made the three airlines' South African operations unprofitable. "The problem is that these airlines reckoned they would sell 70 per cent of their tickets in Europe and only 30 per cent locally," said one industry insider. "But as it turned out, they sold 90 per cent of their tickets locally, in rand, and that proved to be unviable." _______________________________________________ Crashlist website: http://website.lineone.net/~resource_base
