SAA Sale to Tsakalo Consortium Falls Through: Leaving South Africa's National Airline in Limbo

Image Source: File Photo/ Sowetan Live

Published by: Everything ZA News

Despite the collapsed deal, Minister Gordhan offered reassurance to SAA employees. He emphasized that their jobs are safe for now, stating, “There’s no need to worry about your jobs or your families’ futures.”

South Africa’s embattled national airline, South African Airways (SAA), has been dealt another blow. Minister Pravin Gordhan announced on Wednesday afternoon during a media briefing, that the proposed sale to the Takatso Consortium, which had been seen as a potential lifeline for the struggling carrier, has reportedly collapsed. This latest development leaves SAA’s future uncertain and raises questions about the government’s long-term strategy for the airline.

Background on SAA’s Struggles

SAA has been in financial difficulty for several years, due to a multitude of factors including mismanagement, corruption, and an unfavourable global aviation landscape. The airline has relied heavily on government bailouts to stay afloat, placing a significant strain on the public purse.

The Tsakalo Consortium, a little-known entity led by businessman and politician Lowell Goddard, emerged as the frontrunner to acquire SAA in late 2023. The details of the proposed deal were not publicly disclosed, but it was believed to involve a combination of debt relief, investment, and job cuts.

The South African Airways (SAA) has been through a rough patch. Three years ago, it went through a business rescue process, then had to deal with being grounded due to the pandemic. This, of course, caused serious financial challenges.

Changing Circumstances and Negotiations

Back in late 2023, the situation was quite different. The market, economy, and air travel numbers were all in a better state. This meant a new valuation for SAA was needed.

The new valuation showed the airline itself being worth around 1 billion Rand (R), while its property assets jumped to a value of 5.5 billion Rand. This meant any negotiations with potential buyers, like Takatso Consortium, had to consider these updated values.

Negotiations Stall

The Minister explained that talks with Takatso continued throughout the latter part of 2023 and into 2024. While some areas of agreement were found, others remained unresolved.

Ultimately, by late last week, both sides agreed to end the negotiation. There was a clause in the original sale and purchase agreement allowing termination by mutual consent if a clear path forward couldn’t be found. After checking on the negotiation status, it became clear there were no easy solutions, so the clause was invoked.

Job Security and Growth Plans for SAA

Despite the collapsed deal, Minister Gordhan offered reassurance to SAA employees. He emphasized that their jobs are safe for now, stating, “There’s no need to worry about your jobs or your families’ futures.”

The Minister went on to outline the government’s commitment to SAA’s sustainability. He pledged to work closely with the airline’s board and management to strengthen their existing corporate plan.

This plan, according to Gordhan, is well-developed and forecasts growth for SAA. Key aspects include:

Network Expansion: The number of routes SAA operates is expected to gradually increase from the current 19 to 40 within five years.
Fleet Growth: The airline plans to lease more aircraft, catering to domestic, continental, and intercontinental travel.
Expert Evaluation: All these plans will undergo rigorous scrutiny by aviation specialists. This ensures job security, the airline’s overall wellbeing, and a continued future for SAA as a national symbol.