The South African government expects regulatory processes currently holding up the semi-privatisation of South African Airways (SA, Johannesburg O.R. Tambo) to be concluded by March 2023.

This was the word from Jacky Molisane, Deputy Director-General of the shareholder representative Department of Public Enterprises (DPE), when briefing lawmakers on the progress of the government's semi-privatisation deal with the Takatso Consortium. Responding to a question, she said: "If the deal falls through, if the government cannot put more money into SAA, then the option we have all worked hard to avoid would have to be taken, and that is the liquidation of SAA”.

In a consequent statement, SAA said Molisane's comments that SAA would be liquidated if the transaction was not concluded were taken out of context by some media. "The import of the statement made by the Acting DG is exaggerated and blown out of proportion".

"SAA management assures that there is a variety of resources within the company and the global aviation industry that can be innovatively exploited for the future success of SAA. We assure our customers and all our stakeholders and partners that there are no plans, nor an intention to see South African Airways liquidated," the airline stated.

The DPE followed up with its own statement, stressing: "The government is committed to the finalisation and on-boarding of the Takatso Consortium, as a strategic equity partner acquiring a 51% shareholding of the South African Airways (SAA)."

"The transaction has been submitted to the relevant regulators including the Competition Commission, Competition Tribunal, and respective aviation authorities for their approval," DPE said."We urge all regulatory authorities to assist in having a speedy conclusion to this process. We also want to assure the loyal customers of SAA that we will do everything possible to ensure that SAA grows from strength to strength.”

Molisane said the transaction proposal was submitted to South Africa's Competition Commission in June, which is expected to decide by mid-October, whereafter the deal also needs to be signed off by the oversight Competition Tribunal. "We have engaged with them, but they are independent bodies, and they need to satisfy themselves in terms of their mandate," she said.

The agreement also needs to be signed off by the South African Air Services Licensing Council, which has given SAA 60 days to provide certain information or face the suspension of its operating licenses.

Responding to questions at the Parliamentary Portfolio Committee on Public Enterprises, Molisane said: "I hear the level of frustration about the delay in terms of finalising this transaction. The challenge is not with the Takatso Consortium. The challenge is that the Takatso Consortium can only come in and take over the 51% shareholding once all the regulatory processes have been completed. "

She reiterated the government had done its due diligence and verified that Takatso had the financial means to conclude the transaction and was eager to conclude the process "sooner rather than later". She was unaware of any intention by the National Treasury to pull out of the deal.

Takatso – consisting of black empowerment asset manager Harith General Partners and ACMI specialist Global Aviation Operations (GE, Johannesburg O.R. Tambo) – is to inject ZAR3 billion rand (USD169 million) in new operating capital as soon as the deal is approved. The government has diverted ZAR10.5 billion (USD592 million) from other departments to covert SAA's historical debt. Of this allocation, ZAR3.5 billion (USD197 million) is still outstanding for covering unflown ticket liabilities and concurrent creditor claims.

Meanwhile, it was revealed the government would contest in the Cape Town High Court next week, a legal case brought by a disgruntled former bidder, Toto Investment Holdings Pty Ltd., which wants the current transaction to be declared invalid, and a new process for a strategic investor launched.

"The DPE has filed its papers in court. We think that our prospects of success are good in the case because we have followed the legal processes," she said.

During the briefing, SAA presented its long overdue 2017/18 financial report, which showed that at the time, the airline had debts of ZAR8.4 billion (USD483 million), total liabilities of ZAR26.7 billion (USD1.5 billion) exceeding total assets of ZAR13.4 billion (USD761 million). Despite the government having injected ZAR10 billion during the financial year, the airline made a total operating loss of ZAR5.4 billion (USD306 million).

Editorial Comment: Added comment from DPE. - 23.09.2022 - 14:46 UTC