SAA Privatisation Collapses

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  • SimonS1
    Participant

    No major surprise there then.

    It seems at the last minute the Government tried to increase the valuation and the buyer said ‘no thanks’.

    https://www.flightglobal.com/airlines/south-african-airways-drawn-out-privatisation-deal-collapses-as-parties-agree-cancellation/157368.article

    3 users thanked author for this post.

    cwoodward
    Participant

    This valuation and the purchase has been on a knife edge for some time and I half suspected this would happen although it could have been a deliberate move with possibly a better healed suiter in the wings.

    1 user thanked author for this post.

    sparkyflier
    Participant

    CW – interesting to hear your take on the SAA privatisation failure. Can I ask who you thought was the suitor and who do you think would be the better healed suitor? SQ? ET? Maybe a combination of the two?


    cwoodward
    Participant

    SF Pleased to respond as I have been watching SAA for the last few years. My interest is that I used to live in SA and became a FF on the airline. It was sad to see it fall to ruins due the prevalent endemic corruption that overcame SA.

    The suitor was Takatso (and possibly still is despite the current posturing) a SA investment vehicle formed for the sole propose of purchasing a controlling 51% of SAA which included the government held 49%. The deal was propagated when corruption surrounding SAA was still rife and has always had a fishy smell, with certain documents being kept ‘secret’ by the government.

    From Ch-aviation
    “There is no certainty as to the outcome of this process. However, in the absence of an agreed amended Sale of Shares Agreement, the conditions of the original Sale of Shares Agreement remain legally binding,” Gordhan disclosed in the letter. He warned about potential legal consequences should certain documents be released, particularly an evaluation report on shortlisted parties by Rand Merchant Bank (RMB), Takatso majority shareholder Harith General Partner’s Expression of Interest, and the Sale of Shares Agreement and Addenda.”

    Sadly it is again a mess with the the ruling African National Congress (ANC) now seemingly pushing again for the government to retain control. However there is a general election in May with the distinct possibility that ANC will be ousted and the past corruption of certain individuals within the ANC coming to light.

    The recovery of SAA is in my view again in danger of failing and until after the election I believe that nothing much will happen – I could well be totally wrong on this.

    Should the current issues be cleared away, the Takatso deal not proceed SAA is a good prize with its valuable routes and slots, geographic position, reputation and history.

    The timing is also close to perfect also with much of the spade work done and African aviation opening up. If one can get past the substantial hurdle of the instability and corruption then it would be prize for one of the large Asian airlines a ME airline or IAG (BA). Singapore is government, owned Swire a cautious but determined investor, JAL unlikely.
    China Airlines an outside possibility.

    Lufthansa group or a consortium I believe the most likely outside buyers.
    Sin


    TheRealBabushka
    Participant

    I read the headline as SAS and not SAA 😂
    Got excited for a moment there that SAS would remain in Star Alliance. 😂😂 Boo hoo!


    SimonS1
    Participant

    Personally I can’t see much interest from international investors.

    Partly because the airline that was SAA is long gone and others have stepped in (Airlink).

    Partly because airline operations in most of Africa are totally inefficient and the chances of a return are small (how many airlines do you know that have ‘lost’ an engine?).

    Partly because of the political risk and the danger that in the event of success/profits various snouts will appear at the trough.

    Good luck to all involved.

    1 user thanked author for this post.

    cybertravller
    Participant

    As a South African, it may be the best solution for SAA to collapse in its current form and for a private company to bring it back by buying the IP rights and relaunching.

    1 user thanked author for this post.

    cwoodward
    Participant

    You could well be correct but I cannot see the SAA government taking that sort of action.


    cwoodward
    Participant

    The sale of South Africa’s Mango airline can now proceed after crucial appeal court ruling.
    Mango was 100% owned by South African Airways, which was at that time itself owned by the government of South Africa

    The former low cost airline is now able to be sold to Ubuntu Air Services after the Supreme Court of Appeal (SCA) dismissed the SA government’s last-ditch effort to stop the sale.

    Mango was grounded due to non-payments and debt to Airports Company of South Africa on 28 April 2021. No Mango aircraft were allowed to either depart or land at any ACSA airport after 28 April 2021.

    Mango operated a fleet of 19 aircraft which served 9 major destinations and was historically profitable until its funds seemingly evaporated ! The 19 aircraft still showed in its fleet as of July 2021 but the whereabouts of these leased aircraft now is difficult to ascertain although possibly 2 B737s remain.
    Going forward (according to ch-aviation) the new owners intend to pay off the airlines debts as necessary for operation and inject an additional ZAR100 million (USD5.34 million) into regional and domestic aircraft and operations. Once the airline becomes sustainable, there’s an option to sell 25% to an international airline for additional capital.

    However the airlines Air Operators Licence appears to have lapsed and obtaining a new one from the SA government may present some difficulty.

    The soon to be new owners Ubuntu Air Services is a partnership between South African tour operator AfricaStay, an established specialist in Indian Ocean holidays and property, and DG Capital seemingly a specialised financial solutions customs solutions, freight forwarding and logistics business.

    1 user thanked author for this post.

    cybertravller
    Participant

    The low-cost aviation market in South Africa is becoming quite competitive. There is FlySafAir, Lift, while I would not call Airlink low-cost they have some very good deals on domestic routes sometimes. Mango will have a tough time with pricing.


    cwoodward
    Participant

    CT I agree and the available funding looks very light – I suspect that they may well be trying to sell it on.
    The government may possibly think the same way which is perhaps why they fought so hard to prevent the sale.


    JamesTC
    Participant

    Apologies for slight thread drift here…

    But I was thinking, with heavy demand on the London-Jo’burg route, the high level of cancellations/delays on BA’s A380’s on this route, and the fact that BA’s second flight and the Virgin flight both arrive into JNB too late to make some regional connections; there’s surely an opportunity for another entrant on this prime route.


    BackOfThePlane
    Participant

    If you mean direct….who?


    JamesTC
    Participant

    It was a general comment, but if SAA manages to be given a new lease of life, the London route would be an obvious early choice as a long haul destination (if it’s backers/owners can obtain LHR slots).


    World Citizen
    Participant

    I remember being a Platinum Voyager card holder and enjoying the SAA standards across the board flying yo Brazil, Europe and the USA… how things have taken a turn for the worse! Corruption, the most popular word in the SA English dictionary! To quote a South African expression: “What a shame” that it has come down to this!

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