Government has agreed to sell its majority stake in SAA to a local jet leasing company and private equity firm, ridding itself of an entity that has long been a drain on state finances.
A consortium comprised of private equity firm Harith General Partners and Johannesburg-based Global Airways, which owns the recently launched domestic airline Lift, will take a 51% shareholding in the country’s grounded national carrier, Public Enterprises Minister Pravin Gordhan said on Friday.
Government will retain a minority stake in the SAA.
The consortium, named Takatso, will invest as much as R3.5 billion over the next three years, Lift co-founder Gidon Novick and Harith CEO Tshepo Mahloele said in an interview.
“Government will have no further financial obligations to the company outside of the existing liabilities that it will settle,” Novick said.
“We are still working on route networks and it will be a phased roll-out based on the demand re-emerging post-Covid.”
The sale of SAA comes about six weeks after the airline emerged from lengthy bankruptcy proceedings, having cut liabilities and reduced its workforce by almost 80%.
The next challenge is to resume international flights, although South Africa remains cut off from much of the world due to travel restrictions.
“With this partnership, we believe that we are closer to achieving the important objective of having a sustainable national airline,” Gordhan said, adding that the new SAA “will be agile enough to cope with the current uncertainty and improvement in global travel.”
The deal represents a triumph of sorts for Gordhan, who has argued for the revival of SAA with the help of private investors while others were calling for it to be liquidated.
The carrier has been the beneficiary of numerous bailouts and government debt guarantees over the years, and Finance Minister Tito Mboweni reluctantly allocated R10.5 billion rand from the state last year to help it stay afloat.
Global Airways started Lift in December last year under Novick, a former head of Comair, which operates the South African low-cost airline Kulula.
Harith invests in infrastructure across Africa and is the co-owner of Lanseria Airport in the north-west of Johannesburg.
While SAA is now “solvent and liquid”, business rescue practitioners said on April 30 that subsidiaries including that low-cost Mango and maintenance firm SAA Technical remained under financial strain and were in the process of being recapitalised.