Public enterprises minister Pravin Gordhan has indicated that SAA will receive about R3.5bn from the state ahead of the conclusion of its sale and operational takeover by its preferred equity partner, Takatso Consortium, though he was insistent this didn’t constitute a new bailout.
Instead, the cash is the balance of R14bn the government has already agreed to in order to settle the airline’s debts and bankroll its restructuring costs before Takatso takes over the entity and assumes operational responsibility. “The total has always been R14bn,” he said.
While this might be announced in Wednesday’s budget, Gordhan, who has twice been finance minister, said he could not guarantee it because he no longer writes the budget. In an interview, he said the funds, some of which will be used to compensate customers who bought SAA tickets before it went into business rescue and stopped flying, were a “done deal”.
“There are various instruments that are available for dealing with issues like this,” he said, adding that it was up to finance minister Enoch Godongwana to decide “exactly which instrument” he wanted to use.
“There is a debt that we owe as the state and we have to find some way of paying it.”
The Takatso Consortium, which was announced as SAA’s preferred equity partner in June 2021, comprises Global Aviation and Harith General Partners. Harith co-founder and Takatso chair Tshepo Mahloele also chairs Arena Holdings, the owner of Business Day and the Sunday Times.
“The parties have concluded due diligence processes, in which no material issues were identified,” Gordhan said. “There [are] a few gaps in the [share and purchase agreement] ... but we are just waiting for some other information to come in.
“Hopefully either by the end of this month or next month” it will be signed, he said.
SAA was one of the biggest victims of the state capture that characterised former president Jacob Zuma’s reign, amassing losses of more than R30bn between 2008 and 2020. The airline was finally put into business rescue in December 2019, a process that seeks to rehabilitate a financially distressed company to enable it to resume operations. It was then grounded by the Covid-19 outbreak.
The fate of the airline caused heated debate in the government, with former finance minister Tito Mboweni, who advocated its closure, losing out to Gordhan’s argument that a new and competitive airline could emerge from the ashes of the “old SAA”. In October 2018, Mboweni agreed to a R10.5bn bailout for the airline.
SAA exited its 18-month business rescue in 2021 and resumed limited operations in September. It still requires the outstanding R3.5bn as part of its rescue plan, as well as working capital to fund operations.
As part of the conditions of the transaction with Takatso, the consortium will come with the “appropriate amount of money to make the airline work”, Gordhan said.
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