South Africa has opted to terminate a proposed transaction involving the sale of a stake in its national carrier, South African Airways (SAA), due to an inability to reach a consensus on valuation and other pertinent terms with a consortium of private investors.
Initiated in 2021, the government’s plan aimed to divest 51% of SAA to the Takatso Consortium, as part of a broader strategy to curtail recurrent financial injections into the struggling flag carrier. However, after three years of negotiations, Public Enterprises Minister Pravin Gordhan announced on Wednesday the cessation of the deal, citing a lack of clear progression.
Mr. Gordhan highlighted the post-Covid-19 market conditions as a significant contributing factor, necessitating a reevaluation of SAA’s intrinsic value. “We are convinced that SAA can sustain itself in the next year to 18 months and that there are various other ways in which immediate financing can be obtained,” he remarked.
The Takatso Consortium echoed the sentiment, indicating that the proposed alterations to the transaction would entail an unfeasible timeline for realization.
Consequently, SAA will revert to full state ownership, though the government expressed openness to exploring alternative partnership opportunities for the airline.
The collapse of the deal represents a setback to President Cyril Ramaphosa’s endeavors to privatize underperforming state-owned enterprises and mitigate state debt.
