The South African government has finally approved the privatization of the national carrier to save the airline from failing due to the drain on state finances.
South African Airways (SAA), the second-largest airline in Africa before the pandemic had not made any profit since 2011 and it was positioned under a state-approved rescue plan in December 2019 to save it from breakdown.
The SAA became stranded in December 2020 and has since become a liability to the state treasury.
South Africa has decided to sell the federal government's majority stake in the cash-strapped state-owned airlines. SAA is joining a group that includes a local private equity firm and a jet leasing company, the country's public enterprises, Says, minister Pravin Gordhan.
The Agence France Presse (AFP) reported that the South African Airways was one of the various signs of "the mismanagement of state-owned enterprises" that characterized ex-South African president Jacob Zuma's administration. SAA was having a hard time surviving even before the Covid-19 pandemic, as it was just struggling to live on national bailouts.
"Having evaluated the current environment, the government has agreed to the (strategic equity partner) owning of 51 percent of the shareholding and government 49 percent,"
Says Pravin Gordhan, South Africa's public enterprises' minister.
The group in which South Africa is selling its national airlines comprises private-equity firm Harith General Partners, an investor in African infrastructure and airports, and Johannesburg-based airline management and leasing firm Global Airways, which owns the newly launched domestic budget airline LIFT. The group will own the majority 51 percent share while the government will keep the minority 49 percent stakes in the shareholding, the minister informed, adding that the new SAA will not be dependent on the government.
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