Johannesburg — SOUTH African Airways (SAA) is set to dispose of its 49% stake in money-losing Air Tanzania.

SAA's divestment from Air Tanzania could put on hold its plan to create three African hubs as part of its growth strategy. The plan was to have a hub in eastern, western and southern Africa.

With the imminent withdrawal from the Tanzanian capital Dar es Salaam as a hub, SAA would be left with Accra in west Africa and Johannesburg as its two gateways to the rest of the world.

SAA bought the Air Tanzania stake for $20m in 2002.

SAA said yesterday that it was in discussions with the public enterprises department on the status of the relationship between the Air Tanzania Company Limited and SAA.

"The discussions are at a formative stage and it would be inappropriate to speculate on the outcome," said SAA spokeswoman Jacqui O'Sullivan.

Tanzanian Infrastructure Development Minister Basil Mramba told his country's parliament this week that "there are problems in the Air Tanzania merger as reported by media recently.

"We have decided to part ways and we are now negotiating with SAA."

Mramba declined to give details of the nature of the problems.

But the east African newspaper last month quoted government officials who accused SAA of failing to meet part of the management agreement.

It quoted Tanzania Civil Aviation Authority director-general Margaret Munyagi as saying Air Tanzania was in a "worse state than before it was taken over by SAA".

SAA in turn accused Tanzania's government of not "being serious" in failing to release about $30m needed to implement Air Tanzania's business strategy to reverse continued losses.