South Africa agreed to sell a majority stake in the country’s grounded national carrier to a local jet-leasing company and private equity firm, ridding the government of an entity that has long been a drain on state finances.
A consortium comprised of Johannesburg-based Global Airways, which owns recently launched domestic airline Lift, and private equity firm Harith General Partners will take a 51% shareholding in South African Airways, public enterprises minister Pravin Gordhan said on Friday. The government will retain a minority stake.
The grouping named Takatso will invest as much as R3.5-billion over the next three years, Lift co-founder Gidon Novick and Harith CEO Tshepo Mahloele said in an interview.
“Government will have no further financial obligations to the company, outside of the existing liabilities that they will settle,” Novick said. “Route networks we are still working on, and it will be a phased roll-out based on demand re-emerging post Covid.”
The sale of SAA comes about six weeks after the airline emerged from lengthy bankruptcy proceedings, having reduced its workforce by almost 80% and cut liabilities. The next challenge is to resume international flights, though South Africa remains cut off from much of the world due to pandemic travel restrictions.
“With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline,” Gordhan said. The new SAA “will be agile enough to cope with the current uncertainty, and improvement, in global travel”.
The deal represents a triumph of sorts for Gordhan, who has argued for the revival of SAA with the help of private investors while others were calling for it to be liquidated. The carrier has been the beneficiary of numerous bailouts and government debt guarantees over the years, and finance minister Tito Mboweni reluctantly allocated R10.5-billion from the state last year to help it stay afloat.
Global Airways started Lift in December last year under Novick, a former head of Comair, which operates the South African low-cost airline Kulula. Harith invests in infrastructure across Africa, and is the co-owner of Lanseria Airport north-west of Johannesburg.
While SAA is now “solvent and liquid”, business rescue practitioners said on 30 April, subsidiaries including low-cost arm Mango and maintenance firm SAA Technical remain under financial strain and are in the process of being recapitalised. — Reported by Loni Prinsloo and Paul Vecchiatto, (c) 2021 Bloomberg LP