SOUTH AFRICA – The government of South Africa has picked black-owned consortium Takatso as the strategic partner for the troubled national airline South African Airways (SAA).
Public Enterprises Minister Pravin Gordhan announced Takatso consortium as the preferred strategic equity partner for the airline after 19 months of uncertainty.
The consortium will own 51% of the airline.
The move is likely to raise the ire of workers unions who feared the airline was being privatized after thousands of employees were laid off at the struggling airline.
The government will own 49% as it will now jointly own South African Airways with the Takatso consortium, which comprises Harith General Partners and aviation group Global Airways.
Takatso is expected to pump in more than US$22 million into relaunching South Africa Airways.
Gordhan said the government will “not be putting any more money” into the new airline.
“The objective of the partnership is to re-launch a flexible, agile airline that will not be dependent on the fiscus,” he said.
Gordhan assured the markets that the chairperson of the South African Airways board will be South African and most board members will be South African, with black pilots being prioritized.
He added that there will be an evaluation of South African Airways’ subsidiaries, Mango, Air Chefs, and South African Airways Technical, as they still require atleast US$200 million cash injection as subsidiaries have been suffering from declining revenue, deferred payments and need restructuring after the airline was placed under business rescue.
“The objective of the partnership is to re-launch a flexible, agile airline that will not be dependent on the fiscus”Pravin Gordhan – Public Enterprises Minister, South Africa
Global Airways representative and co-founder of new airline LIFT Gidon Novick said they now had to figure out the routes the airline will want to fly and what planes will be used.
“We want to focus on customers, especially those who have been loyal in the past,” Novick said.
SAA was placed under administration in December 2019, and its long-standing financial woes worsened during the COVID-19 pandemic. All operations were mothballed in September 2020.
Its administrators said in a statement that they had filed a notice of “substantial implementation” of a business rescue plan with South Africa’s Companies and Intellectual Property Commission.
That meant they had “effectively discharged the business rescue and handed over the operations of SAA back to its board and executive team”, adding SAA was now solvent.
The airline is one of a handful of South African state companies that depend on government bailouts, placing the budget under huge strain at a time of rapidly rising debt.
The airline exited administration in late April after receiving US$550 million from the government, but at the time it did not say when it would take to the skies again.
The airline aims to resume flights in July or August, but the restart date will depend on how the COVID-19 pandemic progresses and whether the airline can resolve pilots dispute.
Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE