In an effort to save South African Airways (SAA) from going under, Takatso Consortium has bought a 51 percent stake in the struggling airline for $221 million or Three billion rand.
The consortium includes pan-African investor group Harith Global Partners and aviation group Global Aviation.
The airline has been under a form of bankruptcy protection since December 2019, but its fortunes worsened during the COVID-19 pandemic and all its operations were mothballed in September 2020 when funds ran low.
The sale according to Public Enterprises Minister Pravin Gordhan will help the South African government to give the struggling airline a new lease of life.
The airline is one of a handful of South African state companies that depend on government bailouts, placing the national budget under huge strain at a time of rapidly rising debt.
The partnership with Takatso will alleviate that financial burden, public enterprises minister Pravin Gordhan said on Friday as the state would no longer provide any funding to the airline, which exited administration in late April after receiving 7.8 billion rands from the government.
Gordhan added that the government will retain a 49 per cent stake with the intention of eventually listing 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.
Following the announcement, co-founder and consortium Chair Tshepo Mahloele said Three billion rand should be sufficient to operate the airline for 12 to 36 months.
The government could dispose of more of its ownership stake going forward, he added.
“They aren’t married to this 49 per cent,” he said. “They won’t be putting more money into this asset.”
An initial public offering for the airline is unlikely to happen within the next three years, and SAA would first need to become profitable, Takatso Chief Executive Gidon Novick said.
Novick said 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.
“We’re going to be competing with the greatest airlines in the world, and we need to be mindful of that,” Novick said.
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 per cent of the entity’s voting rights and certain areas of national interest, Gordhan said.
