SAA sale looks a rational decision
VISION: GLOBAL AVIATION ENVISAGES AGILE MODEL In retaining 49% of the airline, the government will share in the upside with no downside.
The pending sale of a 51% shareholding in South African Airways (SAA) to the Takatso Consortium, comprising Harith General Partners and Global Airways, has set off a storm of controversy and conspiracy theories.
The department of public enterprises (DPE) has, however, made a brave decision in launching a public-private partnership that could be the blueprint of such partnerships in the future.
The government will pick up the historical liabilities, definitively stopping the fiscal bleed.
The consortium has raised R3 billion to get SAA into the skies and operating again.
Perhaps people should look back about 24 years ago, when SA Breweries sold its wholly owned subsidiary OK Bazaars to Shoprite for R1 and walked away.
In retaining 49% in SAA, the government will at least share in the upside, with no downside.
If the consortium is successful, the government can look forward to dividends and taxes on revenue.
It will, in any event, receive employment taxes and value-added tax.
The due diligences still have to be carried out.
Selling a 51% shareholding in a loss-making state-owned enterprise to a consortium that has the expertise in entrepreneurship, raising capital and running an airline is a rational decision.
Gidon Novick, who is chief executive of Global Airways, is former joint-CEO of Comair and founder of Kulula.com. He also served as CEO of Discovery Vitality, founded venture capital platform Lucid Ventures and recently launched Lift Airline.
In a telephonic discussion with Moneyweb on 15 June, Novick confirmed he and his aviation team commenced discussions with the DPE in 2020 and had made recommendations regarding SAA’s future.
He and his team envisaged the new SAA as a startup, and had in mind a very agile innovative model from a cost point of view.
“It will take effort and commitment to get this right, and [it] will not be a magical return on investment,” said Novick.
“One needs to have a long term view.” –