South Africa\u2019s minister in charge of embattled state-owned companies gave an impassioned defense of the sale of a majority stake in the national carrier for about $3 (R51)\u00a0 – a deal that\u2019s subject to a lawsuit from one of the spurned bidders.<\/p>\n
The privatization of South African Airways is a vital reform for the country\u2019s battered economy, Public Enterprises minister Pravin Gordhan, 73, said in an interview at Bloomberg\u2019s Johannesburg office. The winning bidder – a partnership between a domestic aviation group and private equity firm – was the one left with the most credible financial backing and industry experience, he said.<\/p>\n
The airline is an \u201cexample of a broken state-owned enterprise that has been loss making, that we have successfully re-positioned and got the private sector involved,\u201d said Gordhan. Discussions with ratings companies suggest the move is \u201ca classic example of reform.\u201d<\/p>\n
The acquisition by the Takatso Consortium has been criticized in some quarters for the notional purchase price, lack of transparency around the sale and an ongoing government requirement to settle debts. The group is made up of Global Airways, which owns domestic airline Lift, and private-equity firm Harith General Partners.<\/p>\n
The backlash culminated in a lawsuit filed last month by Toto Investment Holdings Pty, which founder Bongani Gigaba said was unfairly excluded from the sale process. Yet the airline had been a drain on government finances for a decade, receiving numerous state bailouts before entering bankruptcy proceedings in 2019.<\/p>\n
The terms of the transaction have been finalized between the parties and the deal is now subject to approvals by South Africa\u2019s competition regulator and industry body, said Gordhan, who was finance minister over two spells under former President Jacob Zuma.<\/p>\n
As part of the deal, Takatso agreed to invest about R3 billion ($177 million) in the airline. \u201cTheir commitment remains in place,\u201d the minister said.<\/p>\n
Nine Destinations<\/strong><\/p>\n SAA has been downsized significantly as a result of bankruptcy proceedings, with the workforce about 80% smaller. The carrier flies to nine domestic and international destinations with a fleet of six Airbus SE jets.<\/p>\n About 30 interested parties were considering a move for SAA, including two \u201cfairly big\u201d foreign entities, Gordhan said. But when the bidding line up thinned out due to the devastating impact of coronavirus on the travel industry, only Takatso was left with the necessary financial backing and aviation experience, he said.<\/p>\n \u201cWhat is concerning is that there\u2019s still a determined effort by some quarters to disrupt this process as much as possible and to raise suspicions around what has been a very legitimate and legal process,\u201d the minister said.<\/p>\n
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