SAA’s R51 sale to Takatso scrapped

South Africa’s government terminated a deal to sell its flag carrier after failing to agree on a fair value for the airline, Public Enterprises Minister Pravin Gordhan said. 

The government was in talks to sell South African Airways to the Takatso group, which is made up of closely held Global Airways and private equity firm Harith General Partners.

Gordhan was speaking to reporters in Cape Town.

“SAA will revert to be 100% owned by the state,” he said. “We are convinced that SAA can sustain itself in the next year to 18 months and that there are various other ways in which immediate financing can be obtained. But at no stage will SAA will get money from the fiscus.” 

Gordhan, the 74-year-old former finance minister, had made the successful privatization of SAA a central goal while running the ministry overseeing state enterprises. He plans to retire after national elections scheduled for May 29.

Takatso acquired a controlling stake in SAA in June 2021, with the consortium set to own 51% of SAA, while the government would own the remaining 49%.

Takatso, under the original deal, would purchase 51% of the company for R51, with the airline having a total value of R100.

Takatso agreed to invest about R3 billion in the airline as part of the deal. This commitment remains in place.

Gordhan pushed this deal through following SAA’s entry into the business rescue.

This valuation has even been criticised within the government and by other cabinet ministers.

Finance Minister Enoch Godongwana has been vocal in his criticism, saying, “What I’m reading is that SAA assets are bigger than R51, and we have paid all the debt.”

“So somebody who would be buying SAA would be buying a clean asset without any debt obligation.”

Godongwana believes it is still necessary for SAA to have a strategic equity partner as the airline does not have the balance sheet to fund its operations and planned expansions.

The government is also hesitant to give SAA any further funding after giving it R51.7 billion in bailouts, which will only cause the airline to remain bankrupt.

“We have said, thus far, we would need proof of funds. That’s our condition to release further funding to SAA, proof of funds from the equity partner,” Godongwana said.

“If they provide that, it may well be that there’s nothing Treasury can do. However, they have got to cross another hurdle because the SAA Act has got to be passed by Parliament.”