Call to put SAA back up for sale

Deputy President Paul Mashatile says that selling a majority of South African Airways (SAA) to those in the private sector with the capital and expertise to turn the embattled state-owned entity around may be the best way forward.

In an interview with the Sunday Times, Mashatile said that the government “is not in the business” of owning airlines, and thus, bringing private players on board to make the entity profitable may be the best. 

“I wouldn’t mind resuscitating SAA as a state-owned company, but my approach would be to partner with the private sector because I don’t think the government will have all the money [to run it],” said Mashatile.

“Remember, SAA was bailed out a number of times; the Treasury must have spent close to R9 billion trying to rescue it,” he added.

Back in 2019, SAA, which had around R28 billion in liabilities and was seen as a black hole for taxpayer-funded bailouts, was placed under business rescue (which it exited in 2021).

The South African government planned to sell 51% of SAA to the Takatso group for R51—made up of closely held Global Airways and private equity firm Harith General Partners—before the deal was called off by former Public Enterprises minister Pravin Gordhan.

One of the central disagreements was that of the reevaluated value of SAA – which was predetermined during Covid (when the airline was on the verge of being liquidated).

“It became clear in the negotiations of the revised transaction structure [that it] must take into account public interest and fair market price; however, these requirements were not met in the renegotiations,” said Gordhan.

Although the deal did not take off, Mashatile said that while the airline’s performance seemed to be improving, the original plan to bring the private sector on board to make the airline profitable was the correct move and should be explored again.

“I think the government reached the stage at some point where it asked itself a question: do we want to own an airline, what’s the point?”

“The right approach would have been to bring the private sector in even much earlier … If we can still do it now, I think we should because there are many people in the private sector who want to invest in an asset like that,” said Mashatile.

The next question would be who held the majority stake in the airline.

Back in May 2024, interim board chairperson of SAA, Derek Hanekom said that the airline is still open to the possibility of a private equity partner investing in the state-owned airline – but it won’t be looking for a majority owner.

Hanekom said that, like last time, the objective of a private equity partner is to secure capital to help stabilise the airline’s finances, reduce its dependence on taxpayer-funded bailouts, and ultimately propel it to new heights.

Unlike last time, rather than the government taking the back seat by selling a majority of the SOE to a private equity partner (as it unsuccessfully tried to do with Takatso Consortium), they would now remain in control by maintaining the majority of the shares.

This was taken one step further by Minister of Planning, Monitoring and Evaluation, Maropene Ramokgopa, who is overseeing the coordination of the strategic SOEs, including SAA, into a holding company after the Ministry of Public Enterprises was dissolved.

Ramokgopa told Business Times that the government should rather bring in private operators to help manage SOEs while they remain 100% state-owned.

However, the deputy president disagreed with these views.

“The right approach would have been to bring the private sector in even much earlier … If we can still do it now, I think we should because there are many people in the private sector who want to invest in an asset like that,” said the deputy president.

Mashatile said that the stake would depend on what private company could bring to the deal, but it would not be prudent for the government to hold the majority stake if the company had the money to revive the airline.

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