South African Airways have a new majority owner, as the government of South Africa sells a 51% stake in the airlines to Takatso consortium. It will be required of the consortium to initially commit more than 3 billion rand ($221 million) to the struggling airline to give it a new lease of life.
The sale of SAA comes about six weeks after the airline emerged from lengthy bankruptcy proceedings, having reduced its workforce by almost 80% and cut liabilities to about 2.6 billion rand.
SAA has been struggling for some years now, and went into a form of bankruptcy protection in December 2019. The South African state had kept it in the air since then, a dependency along with a handful of other South African state companies, has placed the nation’s budget under huge strain at a time of rapidly rising debt.
According to the public enterprises minister Pravin Gordhan, who spoke to Journalists on Friday, the partnership with Takatso is expected to alleviate the state’s financial burden, as South African national government will no longer provide any funding to the airline.
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South Africa will retain a minority stake of 49% in the airline, which exited administration in late April after receiving 7.8 billion rand from the government.
Gordhan added that it is the government’s intention to eventually list the airline to address future funding requirements.
“The objective of bringing in an equity partner to SAA is to augment it with the required technical, financial and operational expertise to ensure a sustainable, agile and viable South African airline,” he said.
The consortium includes pan-African investor group Harith Global Partners and aviation group Global Aviation, Gordhan said.
Speaking after the announcement, co-founder and Chairman of the consortium Tshepo Mahloele told Reuters that 3 billion rand should be sufficient to operate the airline for 12 to 36 months.
Commenting on same, Takatso Chief Executive Gldon Novick said that Takatso would seek to relaunch SAA as soon as possible, prioritising first domestic service followed by regional destinations. International long-haul routes would follow but would be selected carefully, and SAA would also work to forge partnerships with major carriers.
An initial public offering for the airline is unlikely to happen within the next three years, and SAA would first need to become profitable, Novick added.
The airline’s subsidiaries meanwhile will be evaluated, in particular Air Chefs, SAA Technical and low-cost airline Mango, Gordhan said, noting that “anything can happen” when asked if some could be shut down.
SAA will continue to be domiciled in South Africa and the government will have a “golden share” of 33% of the entity’s voting rights and certain areas of national interest, Gordhan said.
The Takatso Consortium
The consortium includes pan-African investor group Harith Global Partners and aviation group Global Aviation.
According to information on its website, Harith General Partners is a Pan-African Fund manger for infrastructure development across the African continent. It is headquartered in Sandton Johannesburg South Africa, and with an office in Cote d’Ivoire.
It claims to be one of the largest investors in African infrastructure, with a long track record of value creation across the continent in the five core infrastructure sectors of energy, transport, telecommunications, health, and water.
Global Aviation is a South African airline that prides itself as “the Uber of airlines.” It recently launched a domestic airline Lift in the country.
Both companies in the consortium will complete a due diligence before the deal is finalized.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur