The South African government on Friday announced it has decided to sell a majority stake in cash-strapped flagship carrier South African Airways (SAA) to a consortium that includes a local private equity firm and a jet leasing company, reported Reuters.
As part of the new sellout deal, the airline will effectively get privatized as investors will hold a majority stake.
“Having evaluated the current environment, the government has agreed to the (strategic equity partner) owning of 51 percent of the shareholding and government 49 percent,” Public Enterprises Minister Pravin Gordhan said during an online media conference.
The consortium includes Harith General Partners, an investor in African infrastructure and airports, and Johannesburg-based airline management and leasing firm Global Airways, which owns the recently launched domestic budget airline LIFT. T
The consortium will own the majority 51% share while the government will retain the minority 49% stakes in the shareholding.
The South African minister said that the new SAA will not be dependent on the government.
“With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline,” Gordhan added.
During an interview, LIFT co-founder Gidon Novick and Harith CEO Tshepo Mahloele said the consortium will invest as much as R3.5 billion ($256 million)over the next three years. The funds will be allocated to the airline’s working capital and help the restart of its flight operations.
Novick said that the government will have no further financial obligations to the company outside of the existing liabilities that it will settle.
SAA, one of the continent’s largest airlines, was placed under a state-approved rescue plan in December 2019 in an effort to save it from collapse. It had not turned in a profit since 2011 and has managed to survive only on state bailouts so far. The South African airline received taxpayer-funded bailouts of R32.3-billion from 2008 to 2020.
