After three years of negotiations, South Africa ended a plan to sell a controlling stake in its flagship airline because the parties could not agree on a value and other parameters, according to Public Enterprises Minister Pravin Gordhan.
The negotiations to sell the government’s 51% stake in the financially troubled South African Airways to the Takatso group—which consists of the closely held Global Airways and the private equity firm Harith General Partners—were canceled, Gordhan said reporters in Cape Town on Wednesday.
The state will once again possess 100% of SAA, he declared. “We are confident that SAA can support itself for the next 12 to 18 months, and there are a number of other avenues through which immediate funding can be secured.”But even after several government bailouts, SAA will never receive funding from the fiscus.
The 74-year-old former finance minister, Gordhan, oversaw state firms and ran the government, making the successful privatization of SAA a top priority.
After the May 20, 2024, national elections, he intends to retire.
When negotiations to sell the stock began, SAA was about to go out of business. When international air traffic came to a near complete stop during the coronavirus pandemic, the chances of a rebound took a serious knock.
At the time, the carrier’s assets were only worth 2.4 billion rand ($129.1 million).
Since its fortunes had improved over the last three years, the business was later valued at R1 billion, and its buildings at R5.1 billion. As a result, the minister stated that the government would not receive fair value if the sale transaction went through.
According to Takatso, the initial deal had been renegotiated, and the updated conditions were no longer thought to be optimal for the company’s shareholders.
“There has been no more work or negotiation on the planned deal. The agreement can be mutually terminated without requiring either party to pay the other a termination fee or any other payment, according to a statement from the parties.
“Going forward independently is in each of our best interests.”
Start of the fresh Paths
The deal’s breakdown, which was first announced in June 2021, is a setback for the government’s attempts to reduce state debt and sell off non-core enterprises.
According to Gordhan, the government is amenable to SAA forming more alliances or code-sharing agreements, provided that these are negotiated by the organization’s board.
In his vision, the airline will lease more aircraft and add more routes.
