(Bloomberg) -- South Africa agreed to sell a majority stake in the country’s grounded national carrier to a local jet-leasing company and private-equity firm, ridding the government of an entity that has long been a drain on state finances.
A consortium comprised of Johannesburg-based Global Airways, which owns recently launched domestic airline Lift, and private-equity firm Harith General Partners will take a 51% shareholding in South African Airways, Public Enterprises Minister Pravin Gordhan said on Friday. The government will retain a minority stake.
The grouping named Takatso will invest as much as 3.5 billion rand ($257 million) over the next three years, Lift co-founder Gidon Novick and Harith Chief Executive Officer Tshepo Mahloele said in an interview.
“Government will have no further financial obligations to the company, outside of the existing liabilities that they will settle,” Novick said. “Route networks we are still working on, and it will be a phased rollout based on demand re-emerging post Covid.”
The sale of SAA comes about six weeks after the airline emerged from lengthy bankruptcy proceedings, having reduced its workforce by almost 80% and cut liabilities. The next challenge is to resume international flights, though South Africa remains cut off from much of the world due to pandemic travel restrictions.
“With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline,” Gordhan said. The new SAA “will be agile enough to cope with the current uncertainty, and improvement, in global travel.”
The deal represents a triumph of sorts for Gordhan, who has argued for the revival of SAA with the help of private investors while others were calling for it to be liquidated. The carrier has been the beneficiary of numerous bailouts and government debt guarantees over the years, and Finance Minister Tito Mboweni reluctantly allocated 10.5 billion rand from the state last year to help it stay afloat.
Global Airways started Lift in December last year under Novick, a former head of Comair Ltd., which operates the South African low-cost airline Kulula. Harith invests in infrastructure across Africa, and is the co-owner of Lanseria Airport north-west of Johannesburg.
While SAA is now “solvent and liquid,” business-rescue practitioners said April 30, subsidiaries including low-cost arm Mango and maintenance firm SAA Technical remain under financial strain and are in the process of being recapitalized.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.