Johnathan Paoli
Public Enterprises Minister Pravin Gordhan has announced that the negotiations between the government and the Takatso Consortium as a private equity partner for state airline entity South African Airways (SAA) are officially canceled.
Gordhan was speaking on the sidelines of Parliament on Wednesday and said one of the main reasons was the exceptional growth in the value of SAA’s assets since the Covid-19 epidemic when the Consortium was selected as the preferred bidder.
The Minister said that due to the nature of the airlines as a public asset, it remained the government’s responsibility to ensure that fair value and the public interest was being served.
In 2021, when the aviation industry was in recession due to the COVID-19 pandemic, the government selected the consortium as its preferred equity partner for a 51% stake in the business, with an expected capital injection of at least R3 billion.
However, Gordhan said that SAA’s assets could not be sold at their 2021 value of R2.4 billion, in light of recent evaluations which estimated the business value at R1 billion and its property at R5.5 billion.
The Minister confirmed that negotiations since last year on the revised valuation had failed and said that whilst there was an agreement over certain issues, others remained contentious between the two parties.
Gordhan said while SAA still urgently needed cash, he believes it can continue to operate in its current form for at least another year.
Former Public Enterprises director-general Kgathatso Tlhakudi said he was not surprised that Gordhan announced that the SAA Takatso deal was off and that the Minister should be held accountable for the blunder.
However, Gordhan has defended his move and highlighted the dangers of liquidation.
“Liquidation means all 4 700-odd staff losing their jobs, all of the assets of SAA would be sold in a firesale, and workers at SAA would go home with R30 000 each notwithstanding many of them have served SAA for 20-odd years,” he said.
Takatso Consortium has responded with Director Tshepo Mahloele saying the changes in the deal to buy SAA would have taken too long, that the time constraints to meet new directives by the competition authorities would have made it even more difficult to conclude the majority purchase of SAA.
“That process as you know of the tribunal went in excess of, I think nine months or so. So, you were seeing another year if you look at where we are right now until we can again conclude this transaction,” the director said.
Mahloele confirmed that the Consortium was considering other opportunities in the aviation industry.
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