EDITORIAL NOTE: An earlier version of this story said the National Treasury had withdrawn its support for Takatso Consortium, the successful bidder for the 51% stake in South African Airways. The story has been corrected to reflect that the Takatso Consortium has welcomed Treasury’s support. SABC News apologises for any confusion caused by the initial story.
The Takatso Consortium, the successful bidder for the 51% stake in South African Airways, has welcomed Treasury’s support, saying this shows government’s commitment to conclude the transaction.
Minister of Public Enterprises, Pravin Gordhan, says the sale of the majority stake in South African Airways to Takatso Consortium has not been finalised yet. He was appearing before the Standing Committee on Public Accounts, SCOPA.
Gordhan says the airline is currently operating on the R3.5-billion provided by government.
The Takatso Consortium is expected to invest R3 billion in the airline as operating capital once it acquires a 51% stake in the national carrier.
Treasury says the decision to sell a majority stake in SAA is a financial risk to the state. Finance Minister, Enoch Godogwana, told SCOPA that Treasury is trying to reduce its guarantees to state-owned entities.
Initially the minister said his department did not take part in any of the SAA-related transactions. However, Treasury later withdrew and clarified the statement implying that they were not consulted on the Takatso Deal.
Gordhan has also told Parliament that the liquidation of the national carrier was not a viable option, saying liquidation would have meant the demise of the company – and an unfavourable condition for its employees. Chartered accountant and commentator, Khaya Sithole, says because SAA did not undergo liquidation, historical liquidity remains with government and the taxpayers.
“In a liquidation process you would’ve killed off all of those historical liabilities and simply offer people whatever that was available that would’ve been the end of the story. Unfortunately, the Department of Public Enterprises, in particular, objected to the idea into the liquidation, the unions themselves also objected to the idea of liquidation because the one key aspect is that in a liquidation all contracts cease to exist, and those of employees.”
The Takatso Consortium says the SAA brand suffered a major blow over the years and extensive rebranding needs to happen.
But decisions regarding the future management of SAA will only be taken by a newly formulated board in due course.
According to IATA forecasts, despite the current depressed market, the South African aviation market will be worth 19.1-billion-dollars by 2037.