One of the more intriguing South African companies with wind beneath its wings is the hitherto staid and low-profile airline Nationwide. It caught the industry by surprise when it announced recently that it was changing hands in the country's first air carrier black economic empowerment deal.
A due diligence is under way leading to finalisation of the deal in April or in May. The recapitalisation created by the sale is expected to meet the airline's immediate to medium term funding needs, including modernising the somewhat dated fleet.
The buyer is African General Equity (AGE) taking up a 51% stake of Nationwide, with the ambition of spreading the fleet's wings to more regional destinations and by opening more domestic niche opportunities and additional overseas routes. How was the deal funded? Responds Reggie Naidoo, AGE's CEO: "We have our own sources of funds and funders, which I can't disclose."
This is AGE's first venture into the airline business and might be one of the company's more canny moves. Tourism to South Africa is booming and could come close to a record 12m arrivals this year.
The country and its surrounding regions have already benefited from the global pre-publicity being churned out for the upcoming soccer World Cup reaching a crescendo for the Cup itself from 11 June to 11 July 2010. The experiences of other World Cups show that the tourism 'halo effect' of the event lives on long after it has come and gone.
Travellers to regional destinations will welcome Nationwide's extended flight plans. Some domestic and regional routes are serviced exclusively by South African Airways with high fares reflecting the lack of competition.
A plus that was attractive to AGE was Nationwide's effective management and...