Aim is to close SAA deal by year’s end

• Risks associated with running the airline will no longer lie with cash-strapped government but with strategic equity partner

As SAA prepares to resume operations on Thursday, public enterprises director-general Kgathatso Tlhakudi said the government hopes to conclude the deal to sell 51% of the state-owned carrier to the Takatso consortium by year ’s end.

As SAA prepares to resume operations on Thursday, public enterprises director-general Kgathatso Tlhakudi said the government hopes to conclude the deal to sell 51% of the stateowned carrier to the Takatso consortium by year’s end.

The parties have concluded due diligence processes, in which no material issues were identified.

They are now finalising the share and purchase agreement, which is “not an easy transaction”, Tlhakudi said. “They [Takatso] need to make sure that all the risks are mitigated ... the due diligence took much longer than planned”

Takatso comprises Global Aviation, owner of the new lowcost carrier Lift, and pan-African infrastructure investor Harith General Partners.

Takatso chair Tshepo Mahloele is also chair of Arena Holdings, which publishes Business Day and other titles.

Though it intends to provide SAA with a cash injection of more than R3bn over the next three years, it says it is not involved in the relaunch plans of the carrier and is not yet part of the airline management.

SAA re-enters the market with R500m working capital, which was allocated to it as part of its business rescue process.

The serial underperforming state-owned enterprise, which last recorded a profit a decade ago and has been relying on state bailouts to remain afloat, entered business rescue in April.

Due to the sale of the carrier to Takatso, the risks previously associated with running the airline, such as its poor growth, high operational costs and elevated debt service costs, will no longer lie with the cashstrapped government but with the strategic equity partner.

The days of bailouts are over, and it is for that reason the state has “gone in the direction that we have, ensuring that the risk going forward is put into the hands of the business people that are at the helm”,

Tlhakudi said.

The interim board chair, John Lamola, said the new airline will adopt a reset in ethos and governance practices, which have previously been characterised by poor leadership, corruption and mismanagement of funds as told by various witnesses at the Zondo commission of inquiry.

“The ethos of the management where you have government and the changing political leadership ... that will no longer have the impact ... the appointment of senior leadership and board are going to be based on merit,” he said.

SAA re-enters the domestic aviation market while passenger demand for airline travel remains subdued and lower than at prepandemic levels.

SAA will initially operate flights from Johannesburg to

Cape Town, Accra, Kinshasa, Harare, Lusaka and Maputo. More destinations will be added as operations are ramped up in response to market conditions.

SAA interim CFO Fikile Mhlontlo said that “travel patterns are challenging” due to Covid-19.

“We have done our projections but those will be tested as we fly. In terms of breaking even ... it is a factor that is informed by the extent to which we travel,” said Mhlontlo.

“We are coming from an airline that had 46 aircraft to an airline that is starting with six aircraft, so it’s a gradual exercise.”