South Africa Cancels Deal to Sell Majority Stake in Flagship Airline

South Africa has abandoned plans to sell a controlling interest in its flagship carrier after three years of negotiations failed to reach an agreement on value and other terms, announced Public Enterprises Minister Pravin Gordhan.

The government had intended to divest 51% of the loss-making South African Airways (SAA) to the Takatso group, comprising Global Airways and private equity firm Harith General Partners. However, talks were terminated, and SAA will remain wholly owned by the state.

“We are convinced that SAA can sustain itself in the next year to 18 months, and that there are various other ways in which immediate financing can be obtained. But at no stage will SAA get money from the fiscus,” Gordhan stated, referring to the series of government bailouts the airline has received.

Negotiations commenced in 2021, with an agreement to sell a majority stake for R51 billion. However, the National Treasury criticized the deal, stating it was never consulted, and the terms favored the buyer.

Gordhan, who had championed the privatization of SAA during his tenure as finance minister, announced plans to retire after upcoming national elections.

SAA faced liquidation before the state initiated talks to sell a stake, but the pandemic further undermined its prospects as global air travel stalled. Despite recent improvements, with assets valued at R1 billion and buildings at R5.1 billion, the government deemed the sale deal inadequate.

Takatso confirmed the termination of negotiations and cited revised terms no longer deemed beneficial to its shareholders. Both parties agreed to end the agreement without any financial penalties.

The collapse of the deal is a setback to the government’s efforts to privatize non-core state entities and manage state debt. Nevertheless, Gordhan remains open to SAA exploring other partnerships or code-sharing arrangements, with decisions to be made by its board.

The envisioned strategy includes expanding routes and leasing additional aircraft, aiming to revitalize the carrier’s operations independently.