The South African government is insisting that the long-running privatization of South African Airways (SAA) is not at risk, despite nearly 15 months passing since Takatso Consortium was named as the lead bidder for a 51% stake in SAA.
On Nov. 18, the South African Department of Public Enterprises (DPE)—which owns SAA—reiterated its belief in Takatso Consortium as an equity partner for SAA. Takatso Consortium comprises two private-sector companies, African infrastructure investor Harith General Partners, which is financing the deal, and South African capacity provider Global Airways as technical partner.
“Government is awaiting the completion of the regulatory processes and thereafter will finalize Takatso’s acquisition of the 51% shareholding in SAA,” the DPE said in a statement. “The deal is not at risk.”
The affirmation followed former Comair CEO Gidon Novick’s resignation from the board of Takatso Consortium, which he has headed as CEO since June 2021, according to his LinkedIn profile.
Speaking on a local radio show, Novick confirmed he had resigned as a director, but he remains a shareholder in Takatso Consortium through Global Airways. “I just literally have no clue what the status of the deal actually is, other than what we read in the press,” he said, noting that he has no information on the capital-raising process or likely timelines.
Novick’s lack of insight into the deal, and his resignation, is explained by a conflict of interests between Novick and SAA. Novick launched South African LCC LIFT in December 2020. In turn, LIFT secures its capacity from Takatso Consortium participant Global Aviation.
A statement from Takatso Consortium said Novick’s resignation as a director was “appropriate,” given that SAA and LIFT are competitor airlines. Takatso also noted that LIFT has pursued a business relationship with SAA outside the Takatso-SAA equity partnership negotiations. The consortium said it has now “supplemented its technical expertise” to avoid this conflict of interests.
The South African government said there has been “deliberate misinformation” about the equity partnership since Novick’s resignation, adding that SAA jobs are being “endangered by the selfishness, reckless behavior and greed of certain elements.” No further explanation was given.
Under the equity partnership, Takatso will need to inject R3 billion ($174 million) in working capital into SAA over the coming two years. “The DPE is confident that as a strategic equity partner, Takatso will introduce the required technical, financial, and operational expertise into the business,” the DPE said.
In turn, the government will provide approximately R3 billion in assets and retain a golden share which will block Takatso from selling the airline without state consent.
The Takatso Consortium deal was submitted to South Africa’s competition and aviation authorities for approval in September. At the time, SAA executive chairman and CEO John Lamola told Aviation Daily that he hoped to complete the process by the end of March 2023, “at the very latest.”
South Africa’s aviation landscape has been dramatically reshaped over the past few years, with the September 2022 final liquidation of SAA’s state-owned sister carrier SA Express (which halted operations in March 2020) and the liquidation of privately owned Comair in June 2022 (after halting flights in May 2022).
The future of SAA LCC Mango is also in doubt. Mango has not flown since the company entered business rescue proceedings, roughly akin to Chapter 11, in August 2021.
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