The South African Government is off loading 51% shares of the country’s national carrier, South Africa Airways(SAA) to The Takatso Consortium.
The Takatso Consortium is a company comprising Johannesburg-based Global Airways, which owns new domestic airline Lift, and private-equity firm Harith General Partners.
According to simpleflying.com, a statement released on the government’s website on Wednesday said South African Airways’ sale is progressing well, and the next steps involve taking approval from the country’s regulatory bodies.
The South African government is looking to sell a 51% stake in the national carrier to the Takatso Consortium. The decision to relinquish control was made following a period of acute financial troubles mixed with corrupt business practices and severe accusations of racial bias.
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The statement said:
“Cabinet was informed that further progress had been made in the disposal of 51% of shares in the SAA to the Takatso Consortium, the preferred Strategic Equity Partner for the SAA. The Sales and Purchase process has now been concluded and signed by the Department of Public Enterprises and Takatso Consortium. The next step involves the approval of this transaction by various regulatory bodies. The public will be updated on further developments in this regard.”
The Takatso Consortium comprises two companies, Harith General Partners and Global Airways. The former is a major investor in African infrastructure and airports, while the latter is a South African aircraft leasing firm. Takatso will get a controlling stake in SAA and is expected to invest over 3 billion Rand ($195.34 million) into the airline.
A rocky journey
South African Airways has found itself in all kinds of financial trouble over the last few years. The airline has not turned a profit since 2011, making it entirely dependent on state aid for survival. Unfortunately for SAA, the government did not have an unlimited cash supply, and one day, the relief packages stopped coming. Soon, the airline ran out of money and temporarily ceased operations.
Unwilling to let the country’s national carrier die, the South African government put the airline into business rescue. Although the government did end up dumping more money into the failing airline, a comprehensive rescue plan was created to revive SAA. A bit of good news came in June 2021 when the government first announced plans for a private partnership.
Governments running airlines
There are plenty of governments around the globe that own and run large national airlines. More often than not, state-owned airlines are poised to make losses and accumulate huge debts over the years. Political interference, incompetent management, and the ever-changing nature of the global aviation industry are some of the most common reasons why state-owned airlines fail.
The pandemic has forced us to reevaluate the pros of a state-owned airline as private players have nothing to fall back on in trying times. Meanwhile, government-owned national carriers can always ask for a bail-out. Despite this luxury, the last few months have seen major national carriers like Air India and Italy’s ITA Airways fall into private hands.
