Deal to sell government stake in South African Airways collapses

A passenger boards a South African Airways (SAA) plane at the Hosea Kutako International Airport, in Windhoek, Namibia, February 24, 2023. REUTERS/Siphiwe Sibeko
Spread the love

JOHANNESBURG,- A deal the South African government has been negotiating for three years to sell a majority stake in South African Airways (SAA) has fallen apart, the minister overseeing the company said on Wednesday.

The government announced the planned deal to sell a controlling stake in SAA to the Takatso Consortium in 2021, part of efforts to end recurring bailouts to the flag carrier.

But Public Enterprises Minister Pravin Gordhan told reporters the government and Takatso had agreed “there was no clear path forward” for the transaction after a new business and asset valuation.

The minister said the government thought the airline could sustain itself financially for the next year to 18 months and that it did not plan to give SAA money in the months ahead.

“There is no going back to the past,” Gordhan said, referring to the era of repeated bailouts. “There is no reliance on government itself. It (SAA) must run its operations as efficiently as it can.”

SAA will revert to being fully state-owned, a government statement said, and a new way to raise money based on SAA’s assets will be explored with financial institutions.

The airline was on the verge of being liquidated before it entered a form of bankruptcy protection in 2019.

Its finances worsened as the COVID-19 pandemic restricted air travel and depleted its already minimal cashflow, forcing the government to hunt for a strategic equity partner to keep it afloat.

A competition watchdog backed the plan for Takatso to buy a majority stake in SAA last year, with the condition that Takatso’s minority shareholders exit the consortium.

Source: Reuters