South Africa's government is buying back the shares in South African Airlines (SAA) it sold to bankrupt carrier Swissair for barely a quarter of the sum it received for them in June 1999.

According to the state's public enterprise minister Jeff Radebe, the government will pay 382m rand ($33.4m, �23.3m) for the 20% share in the country's flag carrier Swissair bought for 1.38bn rand.

At the time, that was worth $210m. The precipitous fall in the value of the rand over the past few months means that is now worth just $120m.

Swissair went bust shortly after 11 September last year, in the early days of the aviation industry crunch, prompting the buyback agreement.

It was expected earlier that the South African government would buy shares back for 85% of their market value.

"Significant discount"

Mr Radebe said that the government, the state transport group Transnet - which owns the rest of SAA - and the troubled Swiss airline agreed to the repurchase at a "significant discount".

The repurchase of the stake will return full ownership of SAA to Transnet and the government is now considering other options to privatise the national carrier.

The sale by the government as part of its privatisation programme in June 1999 was followed later that year by a $8m option to sell another 10%.

Swissair's expensive expansion strategy meant it had extensive holdings in indebted foreign airlines, a key factor in its collapse last October.

Under the restructuring plan for the Swiss flag carrier, its stake in many foreign airlines is to be sold.

But because of a spectacular fall in airlines' share prices, caused by the world's economic downturn and post effects of 11 September, the sale prices are expected to be a fraction of what Swissair had paid when the industry was booming.