South African Airways Eyes New Strategic Partners After Takatso Deal Collapse

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South African Airways (SAA) is actively pursuing a new strategic or equity partner to bolster its financial standing, following the dissolution of its agreement with the Takatso Aviation Consortium. Interim CEO John Lamola, in discussions with South Africa’s Financial Times, highlighted the airline’s aspirations to eventually list on the Johannesburg Stock Exchange. However, the government intends to maintain a “golden share” to safeguard national interests.

Despite the absence of formal negotiations, Lamola remains hopeful for a definitive plan by mid-2025, hinting at potential interest from other airline investors. The search for new partners comes after the breakdown of the 2021 agreement to sell a 51% stake to Takatso, a consortium that included Harth General Partners, Global Aviation Operations, and Syranix. Disagreements over valuation, the status of Global/Syranix (owners of Lift Airlines), and political resistance within the African National Congress contributed to the deal’s collapse.

A significant factor in the negotiation difficulties appears to be the government’s revised valuation of SAA, which has seen a substantial increase from ZAR2.4 billion (USD142 million) in 2021 to ZAR6.5 billion (USD342.2 million) today, reflecting post-pandemic economic shifts.

Despite receiving substantial state support totaling ZAR50.7 billion (USD2.7 billion) over the past 16 years, SAA is on the verge of reporting its first profit in over a decade for the fiscal year ending March 2023, according to Lamola. This achievement, however, is tempered by ongoing concerns regarding the airline’s financial transparency and management practices.

A report by the South African Auditor General underscores significant issues with financial mismanagement, inadequate record-keeping, and deficiencies in SAA’s finance department. Allegations of non-compliance in procurement and expenditure management have also been highlighted, pointing to extensive wasteful expenditure.

In response to the failed Takatso agreement, South Africa’s Parliamentary Portfolio Committee on Public Enterprises has advocated for an independent investigation by the Special Investigating Unit into the matter. This call follows allegations of irregularities and misconduct in the deal’s orchestration, although direct evidence implicating individuals has yet to be uncovered.

As SAA embarks on its journey to secure new strategic partnerships, the airline’s future hinges on addressing its historical challenges and ensuring a sustainable path forward amidst ongoing scrutiny and the need for operational and financial restructuring.

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