South African Airways (SA, Johannesburg O.R. Tambo) continues to search for a new “strategic or equity partner” to inject capital into the troubled state-owned carrier after a previous deal with the Takatso Aviation Consortium fell through, according to interim CEO John Lamola.
In an interview with South Africa's Financial Times, he said that after finding such a partner SAA would like to list on the Johannesburg Stock Exchange, but the government would retain a so-called "golden share" to ensure the country’s interests are protected.
While no formal talks have yet taken place with a potential partner, Lamola is optimistic there will be "a concrete and solid plan" by mid-2025 for new investors, possibly including other airlines.
Pretoria reached an agreement in 2021 to sell 51% to Takatso, comprising majority partner Harth General Partners (a Black Economic Empowerment firm), ACMI-specialist Global Aviation Operations (GE, Johannesburg O.R. Tambo), and marketing consultancy Syranix, but the deal unravelled last week over disagreements on price; the status of Global/Syranix, which own competitor Lift Airlines (GE, Johannesburg O.R. Tambo); and political opposition to privatisation from within the governing African National Congress (ANC).
One of the stumbling blocks in the Takatso deal appears to have been the government's new valuation of SAA, which has risen from ZAR2.4 billion rand (USD142 million) in 2021 to ZAR6.5 billion (USD342.2 million) now, thanks to post-Covid economic and market realities.
Despite receiving ZAR50.7 billion (USD2.7 billion) in state bailouts over the last 16 years, Lamola revealed that unpublished accounts for the year to March 2023, now being audited, will show that SAA turned its first profit in more than a decade. "Some will say this is a modest profit but, given where SAA is coming from, I wouldn’t say this is a modest achievement at all,” he said.
However, uncertainties remain regarding the airline's financial transparency, with concerns raised over its accounting practices and capitalisation. A recent report by the South African Auditor General highlights significant financial mismanagement and deficiencies at the airline. The report shows that the government has injected ZAR38.1 billion (USD2 billion) into SAA since April 1, 2018, with ZAR27.6 billion (USD1.4 billion) deposited post-business rescue.
The Auditor General also issued disclaimers on all four sets of SAA's accounts due to inadequate record-keeping, misstatements, and lack of essential skills within SAA's finance department. Concerns were raised on alleged non-compliance in procurement, contracts, expenditure, and revenue management, resulting in substantial wasteful expenditure.
Meanwhile, South Africa's Parliamentary Portfolio Committee on Public Enterprises has unanimously called for an independent investigation by the country's Special Investigating Unit (SIU) into the collapsed Takatso deal. This follows allegations made by the former director-general of the Department of Public Enterprises (DPE), Kgathatso Tlhakudi, claiming irregularities in the deal orchestrated by outgoing Public Enterprises Minister Pravin Gordhan. The committee itself lacks the capacity to investigate these claims, leading to the call for an external inquiry. While the committee acknowledged questionable processes, it found no direct evidence implicating Gordhan, who has denied the allegations. Tlhakudi was dismissed in 2023 following an inquiry into a separate complaint.
