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‘New SAA deal will give airline an opportunity to operate as a functional business’

15 June 2021, 5:57 AM |

Risha Maduray | @SABCNews

Government says once the consortium has completed due diligence into the business, a sale and purchase agreement will be signed before the official launch of the new SAA.

Image: Reuters

Government says once the consortium has completed due diligence into the business, a sale and purchase agreement will be signed before the official launch of the new SAA.

Former South African Airways (SAA) CEO Vuyani Jarana says the SAA deal, intended to sell a 51% stake to an equity partner with government, will give the airline the opportunity to operate as a functional business.

Public Enterprises Minister Pravin Gordhan announced last week that the Takatso consortium would acquire a 51% stake in SAA with government due to keep a 49% shareholding.

Gordhan says Takatso also intends to inject over R3 billion into the deal.

Public Enterprises Minister Pravin Gordhan announces equity partner for SAA:

SAA was in business rescue since December 2019 with practitioners having ended the process two months ago.

Jarana has welcomed the upcoming deal.

“For me, the deal ticks all the boxes that are supposed to make sure that SAA is set on a path to success. In terms of the 51% shareholding, you look at the players who have acquired the 51%, they have a promise of both capital pools and technical skills.”

“51% begins to free SAA from the shackles of the Public Finance Management Act (PFMA) which gives it a chance to operate like a commercial business and compete with its peers,” adds Jarana.

The video below discusses the new SAA deal:

Industry experts raise questions

Meanwhile, industry experts in the aviation sector are raising red flags over the deal that saw Takatso Consortium becoming the majority shareholder in the now restructured SAA.

Industry experts are wondering how the deal was finalised without due diligence being completed.

Wits University Professor Tshepo Mongalo says, “When I heard that there would be no money exchanging hands as a result of this transaction, I realised that this is probably a financial assistance transaction, the equivalent of vendor funding.”

“SAA just came out of business rescue and it may not be complying with the solvency and liquidity test as required. On top of that, I wonder how much due diligence has been done to see if this transaction is in the best interest of the company,” says Mongalo.