The public enterprises department says it hopes to finalise an agreement with private consortium Takatso about the acquisition of a 51% interest in SAA by the end of the February, or March.
In a response to questions from Business Times, department spokesperson Richard Mantu said the “negotiations to finalise the sale and purchase agreement are at an advanced stage”, and that it hoped to “sign the agreement either by the end of February or next month”.
SAA exited business rescue at the end of April last year before taking to the skies again in September. Public works is the shareholder of SAA.
Takatso was announced as the government’s preferred strategic equity partner in June last year and plans to bring about R3bn in funding to the airline over three years.
A due diligence of SAA by Takatso has already been completed and showed no major issues and the consortium has since been negotiating with the DPE about the sale price.
Takatso consists of pan-African infrastructure investor Harith General Partners and local aviation group Global Aviation, the owner of low-cost carrier Lift.
Takatso chair Tshepo Mahloele is also chair of Arena Holdings, which publishes the Sunday Times, TimesLIVE and Business Day.
Earlier this week, Business Day reported public enterprises minister Pravin Gordhan as saying that SAA will receive an additional R3.5bn from the government.
Contacted for further comment on this issue, Mantu said the amount formed part of the R14bn “funding requirement for SAA to implement” its business rescue plan.
A total R10.5bn was required for the business rescue in the 2020/2021 financial year and the balance of R3.5bn was required over three years from the 2021/22 financial year, he said.
Finance minister Enoch Godongwana, in his budget speech on Wednesday, speaking generally on state-owned enterprises, said “more than R308bn has been directed towards bailing out failing state-owned companies. Since 2013, front-line services and infrastructure reduced by R257bn”.
Godongwana added: “The future of our state-owned companies is under consideration by the Presidential State-Owned Enterprises Council. Their future will be informed by the value they create and whether they can be run as sustainable entities without bailouts from the fiscus. Some state-owned companies will be retained, while others will rationalised or consolidated.”
TimesLIVE reported that in a briefing to the media, shortly before delivering his budget speech, Godongwana said SAA had not been allocated additional funds.
After the budget speech, Mantu reiterated that the SAA deal with Takatso was “progressing well” and “further announcements will be made shortly in this regard”.
“Government will honour its commitment to implement the SAA business rescue plan,” he said.
A Takatso spokesperson said the consortium “could confirm that negotiations with the department of public enterprises to buy a 51% stake in SAA are well advanced”.
The spokesperson referred further enquiries to the department.
SAA confirmed the “sale and purchase agreement is at an advanced stage”, adding that “once finalised, government will inform the public”.
Whether the proposed private sector and government funding is enough to sustain SAA depends on the scale at which they want to roll out operations at the airline, said aviation economist Joachim Vermooten.
“You could have a small airline, which has less of a risk to make big losses and requires a lower scale of funding,” he said.
Vermooten said running an airline is expensive, regardless, and that SAA’s relaunch had come at a time when the industry was in a difficult position.
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