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Wednesday / 19 June 2024
HomeNewsSouth African Airways was sold for R51 – Now government is trying to renegotiate

South African Airways was sold for R51 – Now government is trying to renegotiate

The government is trying to renegotiate the sale of the state-owned South African Airways (SAA), following a deal concluded in 2021 that saw the airline sold for just R51.

This was announced by the Minister of Public Enterprises, Pravin Gordhan, during a recent media briefing in Cape Town.

However, much of the information surrounding the negotiations has not been made public, as the minister claims they are of a commercially sensitive nature and must be kept secret.

SAA is going private

South African Airways, once regarded as a world-class air service, went into voluntary business rescue in December 2019 after several years of financial losses and ended up suspending operations the following year when the Covid-19 pandemic broke out.

In 2021, the national government finally sold a majority stake in the company to a private investment company known as Takatso Consortium, which would acquire a controlling share of 51% while the government’s Department of Public Enterprises (DPE) will hold onto the remaining 49% share.

The deal drew a lot of media attention when it was first announced, not just because the state-owned entity would be taken over by a private firm for the first time, but also because the controlling stake was sold for just R51 – leading to criticism from the public over the trivial sum for a major asset.

Gordhan defended the transaction in an interview with Bloomberg in 2022, claiming that the airline had been running at a loss since 2011 and that Takatso had agreed to invest R3 billion, meaning the meagre sale price was more of a symbolic gesture than anything else.

The deal was finally approved by the Competition Tribunal of South Africa in August 2023, though not all of the details regarding the takeover were made public.

However, the government’s sentiment towards the deal has evidently changed, as Gordhan has now disclosed that the DPE is attempting to renegotiate, according to Moneyweb.

Several details about the transaction are still unknown, which the parliamentary portfolio committee has been trying to uncover for an extended period following accusations from the former director-general of the DPE that the deal was manipulated to benefit certain individuals.

The minister eventually relented to the investigation, but only under the threat of subpoena, and a discussion was only agreed to on the condition that it take place behind closed doors and that the attendants sign a non-disclosure agreement.

Gordhan’s argument is that the documents cannot be made public as the negotiations are cognizant of market conditions and that the outcome of the process is still uncertain.

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