South African Airways has a new Strategic Equity Partner (SEP), Takatso Consortium, a majority black-owned private entity. It is hoped that this change will set the airline on the path towards profitability.
There is no prize for guessing that there is a sigh of relief to the tax payers, who have been throwing money into the bottomless pit in the shape of the terminally loss-making, state-owned South African Airways (SAA). The airline has found a Strategic Equity Partner (SEP), majority black-owned Takatso Consortium, according to announcement Minister of Public Enterprises, Pravin Gordan, made during a press briefing recently.
Following the deal that has been concluded, Takatso, as a private entity, will own 51% of SAA shares and the South African Government 49% of the shares. Two organisations, Harith General Partners, a pan-African fund manager and investor in African infrastructure, and airport development, and Global Airways, a local airline management firm, are Takatso’s shareholders. Effectively, government has relinquished its sole shareholding, which will result in the following notable changes to the airline’s operations:
· The South African Government will have a golden share of 33% of the entity’s voting rights. This will be a non-dilutable share;
· The government will be a costly liability less as the SAA’s financing will be independent of the fiscus. Instead, the private partnership will foot the cost of the carrier’s operations, with Takatso Consortium bringing on board operational expertise and commercial experience. Initially, Takatso will pump over 3 billion rands ($220 million) in the airline’s operations;
· At some point, the partnership intends list the airline on the JSE as a capital-raising exercise. Also, this will allow
interested investors and South African citizens to buy shares and own a stake in the airline;
· The South African government will be responsible for the airline’s debt (historic liabilities);
· SAA’s subsidiaries will undergo rigorous review, and based on that, a decision on how to approach restructuring will be reached; and
· Ex-SAA staff and personnel from Tikatso will constitute the airline’s employee complement responsible for operations.
Gordan explained that, by bringing an SEP, the government’s idea is to have a restructured SAA that is viable, agile, competitive and above all, not dependent or reliant on government finances. It would be interesting to observe how the revamped SAA will take off and navigate the airline business space which had been hardly hit by the COVID-19 pandemic.
The carrier entered into business rescue on December 6, 2019 and exited from business rescue on April 30, 2021.
