By Lehlohonolo Lehana.
The sale and purchase process of a majority stake in South African Airways (SAA) has now been concluded and signed by the Department of Public Enterprises (DPE) and its strategic equity partner for the airline, the Takatso Consortium.
In a statement following an ordinary meeting held on Wednesday, Cabinet said progress on the sale to strategic equity partner, Takatso Consortium, now hinges on approval from industry bodies.
“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,” Cabinet said.
The strategic partner was announced in June last year in an effort to save the struggling airline after it was put under business rescue and grounded.
SAA was in business rescue for more than a year, from December 2019 to April 2021, and started domestic commercial flights again on 23 September 2021. It had stopped commercial flights in May 2020, when the rescue practitioners indicated that there were insufficient funds to continue.
SAA’s rescue plan totalled R10.3 billion and did not include money for its subsidiaries Mango, SAA Technical and AirChefs, which were not in business rescue at the time. The DPE, however, asked Treasury for R14 billion to rescue not only SAA but also have funding to keep the subsidiaries going. Then Finance Minitser Tito Mboweni, only allocated R10.5 billion to SAA in his medium-term budget in 2020.
This led to the DPE obtaining a special allocation from Parliament in early 2021 to take some of SAA’s R10.5 billion to help the subsidiaries – which was R2.7 billion in total.
Mango has since gone into business rescue and is looking for a buyer.
Because of the funding “gap”, and in order to enable SAA to exit business rescue, a so-called receivership was created to house specific liabilities of SAA, which at the time amounted to about R3.5 billion and included debts to certain creditors in terms of its rescue plan.