'The days of bailouts are gone' - SAA to start flying ahead of Takatso deal

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SAA '2.0' will take to the skies on Thursday.
SAA '2.0' will take to the skies on Thursday.
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  • Last year National Treasury allocated R10.5 billion to SAA.
  • The airline has begun discussions with Takatso Consortium on its acquisition of 51% of the airline.
  • SAA will make its first flight in more than a year on Thursday 23 September.

Although South African Airways (SAA) is yet to conclude its transaction agreement with Takatso Consortium, Department of Public Enterprises (DPE) director-general Kgathatso Tlhakudi says it’s important that the airline starts flying and generates cash.

"You cannot have this metal and these people sitting around, they burn cash, sitting on the ground. So, we want them to be operating, converting that cash into new cash flows. The sooner they get started at SAA, the better," said Tlhakudi.

Tlhakudi was speaking on the sidelines of the launch of SAA on Wednesday. The airline will officially make its maiden flight on Thursday, having battled to return after halting its flights at the beginning of South Africa’s Covid-19 lockdown in March 2020.

Last year, National Treasury allocated R10.5 billion to SAA and the then ailing airline has since begun discussions with Takatso Consortium on its acquisition of 51% of the airline. The consortium is made up of infrastructure investment firm Harith and LIFT airline owner, Global Aviation, and is expected to inject R3 billion into the airline over the next three years.

On Tuesday, Takatso said it was not involved in SAA’s management, funding or relaunch plans. But the consortium’s CEO Gidon Novick said the due diligence process of the acquisition is "substantially complete".

Tlhakudi reiterated Novick’s statement, saying that the "complex" share sale and purchase agreement was almost complete, which means that Takatso has not taken the reins yet.

"We are impatient, of course, but we’ve had to allow time to ensure that it is done properly," he said. 

Tlhakudi further explained that although it statement sounded harsh, Takatso was simply clarifying that it is "not in the cockpit yet".

"The agreements are now what’s standing between us and them taking over the business, so we must have those finalised so that they reflect our intentions," he said. 

'Days of bailouts are gone'

The director-general said he expects the deal to be wrapped up before the end of 2021.

"The message is very clear … the days of bailouts are gone," he said.

Tlhakudi explained that it is for this reason SAA is being put into the hands of an owner with the commercial and technical skills, who will also carry the risk.

As for why the state was so invested in keeping the airline going, Tlhakudi said it to ensure that air travel costs never become unaffordable for South Africans. 

Overall, he said the department had made good progress in turning around the country’s parastatals, citing SAA’s return as an example. The department is in the process of ensuring that rail, ports and pipeline company Transnet and arms manufacturer Denel are back in shape.

The airline’s interim chairperson, John Lamola, was also at the launch. He described SAA as a "phoenix rising" and said that he was approaching the celebration of its first flight with a sober sense of awareness. 

The embattled airline’s business rescue ended at the end of April, more than a year after it began in December 2019. But the carrier is putting its chequered past behind it, with Lamola saying it would focus on making appointments based on merit and its leadership will not change from one minister to another.

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