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Why was Takatso not yet on board when SAA took to the skies?

‘I guess maybe naively we thought the deal could be done a lot quicker’ – Takatso CEO Gidon Novick.

This interview was aired on RSG Geldsake (in English).

RYK VAN NIEKERK: South African Airways, SAA, took to the skies last week, 18 months after its planes were grounded when the airline went into business rescue.

The airline’s revival raised eyebrows as its private-sector partner, the Takatso Consortium, was not involved with the airline operations. The government and the consortium announced a few months ago with great fanfare that Takatso will pump R3 billion into SAA over three years, and will receive a 51% shareholding in return. The Takatso Consortium consists of the infrastructure investment firm Harith and the aviation group Global Aviation.

On the line is Takatso CEO Gidon Novick. Gidon, thank you so much for joining me. Why were you not in seat 1A when the first plane took off?

GIDON NOVICK: Ryk, I wasn’t offered that seat, unfortunately. They always put me at the back, next to the toilet.

RYK VAN NIEKERK: [Chuckling] So what happened? Why wasn’t Takatso operationally involved when the airline took to the skies?

GIDON NOVICK: We are still busy with the transaction. It’s a complex one, lots of moving parts [and with] a long legacy, as you well know. We are taking our time. We’ve got to do it properly. We’ve got to do it right and work through the complexities. In the interim there was a decision to get started and I guess timing just wasn’t appropriate for us to get involved in the relaunch that took place last week.

Read: SAA takes to the skies after being grounded for 544 days

RYK VAN NIEKERK: Well, the deal was announced in early June. It’s now three months later. Was the intention in June to be part of the whole relaunch of the airline?

GIDON NOVICK: I think it would have been ideal, to be honest. I mean, it did make sense to do it all in one. But I don’t know – from my experience, not only in this particular transaction, these deals always take longer. Everyone always sits down and says ‘Let’s get it done, get it done quickly’, and inevitably it does take longer than everybody would ideally like.

RYK VAN NIEKERK: What are the outstanding points you still need to agree on, because it does sound as if there may be a bit of friction when you are probably now looking at the fine print?

GIDON NOVICK: Yeah.

There is friction and there should be friction in a transaction like this.

It’s a significant transaction, not only in terms of the value, but in terms of the significance to the country, to state-owned enterprises – government strategy regarding state-owned enterprises. So I think it’s got to be done right. Certainly from the consortium’s point of view, it’s got to make commercial sense. And there are pieces that need to be negotiated: the value, the terms and conditions, and it’s got to be done properly.

Read: Government sells majority of SAA to private entities

RYK VAN NIEKERK: I think what was surprising was that government was prepared to offer a private sector company a majority stake in the airline. The number of 51% was mentioned – is that one of the sticky points?

GIDON NOVICK: Not at all. We wouldn’t be involved and we wouldn’t be in the process if it wasn’t for that. That was absolutely necessary – that it is privately controlled and commercially run. I think the two come hand in hand. And so, absolutely, that’s agreed and will be part of the deal.

RYK VAN NIEKERK: They were reports that one or both of the Takatso shareholders, Harith and Global Aviation, withdrew from the process. What is the status on their involvement?

GIDON NOVICK: No, no, no. Both are involved. Harith is the key strategic funding partner and Global and the team at Lift are involved as technical partners. So it’s very much in play, very much intact.

RYK VAN NIEKERK: And the R3 billion funding – is that still available?

GIDON NOVICK: Well, that R3 billion is an estimated commitment over time. It’s certainly not an upfront commitment. As we learn more and more about the business and the business plan we’re getting a better sense of the exact quantums involved.

But there certainly will be a significant upfront investment into the business; importantly it’s going to be going into the business and not as a purchase of shares or not a quantum for a purchase of shares.

But the exact quantums of investment are one of the issues still being negotiated.

RYK VAN NIEKERK: So how long do you think it will take for you to actually put ink on paper?

GIDON NOVICK: Ryk, you know what, I’m actually not even going to give a timeline, because you just can’t predict these things. On the one hand we want to do it sooner rather than later, but on the other hand we’ve just got to get it right. And in my mind that’s more important than speed.

If it takes another few months then so be it, but it must be done right.

There are a lot of parties involved in this transaction, as you can imagine, to get everybody into a place [where] they’re comfortable and happy, and more importantly, to give the South African public the confidence that these types of deals can be done and can be successful I think is critical.

RYK VAN NIEKERK: Who are you negotiating with? The SAA management, the board, or the Department of Public Enterprises?

GIDON NOVICK: No, it’s the DPE. They are the shareholder and they are the party that’s relinquishing 51% of their shareholding. They are the counterparty and they’ve actually been really good counterparties, negotiating partners – tough when they’ve needed to be tough. I think fair overall. Obviously there’s just a plethora of issues to be negotiated and discussed.

RYK VAN NIEKERK: It sounds as if the attitude has changed since the announcement. We spoke shortly after it was announced in June this year, and you were very, very positive – and it almost sounds like you are a lot more reserved now. Was the deal maybe announced prematurely before you actually had to talk about the key elements of the contract?

GIDON NOVICK: I think the intent is very much still there, Ryk. You know, both parties want to do the deal. I guess maybe naively we thought it could be done a lot quicker. But the intent is there and we still very much want to do it and want to do it right. If it takes a little bit more time than we initially anticipated, then we need to be a little bit patient.

RYK VAN NIEKERK: Gidon, thanks so much for your time. That was Gidon Novick, CEO of Takatso.

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COMMENTS   39

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I still can’t believe they found a buyer for SAA, lol. There’s a sucker born every minute.

Agreed — With a legacy of the brand hanging over it Global and Harith would do better to walk away and start a new airline!!!

Oh wait — the ANC has got lots of free voyager miles ne !!!

@EFF CommieSar.

So how did the VBS Bank heist turned out for you guys in the end? Are we “paying back the money” sometime soon?

They didn’t find a buyer. The taxpayer is still funding this dead duck via PIC input.

There is no buyer for SAA. There is a potential buyer and by the look of things they have one foot in the back door. If they want out they will get out.

Because they are not … quite … ready to shred R3b …

So, who is paying the operational costs right now..?

The 5% ..The glue that holds everything together

The day is nigh when all becomes unstuck and the money dries up..SAA will be auctioned in pieces

..speak up Pravin…we can’t hear you..

The whole thing is just an anc con job!!

Cyril and his henchmen facilitating plunder.

Another bailout on the way.

Mmmm who gets what has not been sorted yet. Takes a while to divide the spoils.

I don’t understand how one relaunches a previously disadvantaged/dis-stressed company without the majority shareholder onboard? Doesn’t exactly inspire any confidence in the so-called new SAA.

i don’t know what happened with the sale transaction in the back ground, but if things are continuing as it is going now question is: who is funding the saa right now? – a few short, and most probably not 100% fully booked, is not going to save saa – the whole situation looks to me more like the suppose to be buyer is rather watching the whole circus from the side ring before jumping into the ring and actively participate in saa

After all: what is the buyer’s actual contribution in the transaction – if it does not include a vast amount of hard cash contribution both parties are wasting time – the R3 billion over time sounds so vague – it can easily be never

can almost guarantee you: by middle next year, if not sooner, we will hear once again somehow the taxpayer’s money has / had to fund saa direct /indirect to keep it afloat

it looks as if the new partner wants to get involved in saa but without taking any saa historical liabilities (loans) in the deal – sounds like we want to be a 51% shareholder of all saa assets at date of the deal, the historical liabilities are ignored and left for taxpayer money to settle – what nice deal

Yes, it is a nice deal, but how else would you get anybody interested in this deal? Nobody should purchase any shares in any of the SOE’s, unless the deal is beyond sweet. After all, what are you buying? Inept, corrupt, useless staff? Systems that doesn’t work? A partner that will want to get involved with their stupid ideas? A business model that is not built on sound business principles? Even though it is frustrating that tax money will yet again have to be doled out, I just can’t see anybody, with a modicum of business sense, doing it in any other way. From where I’m sitting, this looks like smoke and mirrors, all set up to allow the government (read Pravin) to start up this dinosaur again, just to slip the tax payer the bill when nobody is watching. This is the real cost of the ego of a politician who should have been in a retirement home already.

i am 100% convinced, as you said it is a “smoke and mirror” case – gives anc more leap time for more excuses why the “deal” did not work out at the end of the day

I think that with every day the deal is delayed the position of the
” purchaser ” gains strength. It will cost SAA ( tax payers ) still plenty to get the “purchaser” on board. All that just to save face of Communist Gordhan and the criminal ANC.

6 planes, a toxic busines partner, billions due on unredeemed tickets, and 3bn.

Just doesn’t make any sense.

Do they own the planes or are they leasing it?

I saw another news article which said they returned the old planes and leased the 6? new ones. More tax money down the drain to inflate egos of fragile ANC politicians.

“And there are pieces that need to be negotiated: the value, the terms and conditions, and it’s got to be done properly.”

One would have expected that these critical issues needed to be finalised before the deal was announced!

I wonder if this kite will be flying anytime soon.

“Why was Takatso not yet on board when SAA took to the skies?”

Maybe they simply did not buy a ticket? And given this SAA, maybe that is the best option?

Who on earth decided on the initial destinations? They are clearly chosen with regional politics in mind. Those kinds of decisions are part of what crashed SAA before.

Please do not buy tickets from SAA. Let them die ASAP

I wish I could like this comment 3 billion times.

naively??!!

The confidence Gidon Novick expressed at the time of announcement does not at all jells with naiveté. So, one is left to believe that there either were lies then or now.

Ryk, prediction – – deal wont be done – real reasons would not be made known – taxpayers will fund a smaller SAA – Novick and his investors would be blamed as reason for failure.
In other words – DPE never intended to sell, they just looking for a scapegoat to tell taxpayers.

No mention of the government’s 30% ownership which apparently is referred to as a “golden share” and gives the government control behind the scenes irrespective of the consortium’s 51% ownership.

in financial terms there is currently nothing left in saa that could be associated with gold – and that counts for what the anc might have thought was a “golden share” as well – not even worth the paper that it may be written on

Now SAA want to get involved with Kenya Airways. Similar intellectual capacity, another doomed airline while Pravin sits innocently in the back ground.

snake in the grass – why get involved in a foreign country’s airways, whilst saa’s management made one massive failure of saa?? on top of it if they(saa-management) get involved in kenya airways, it is done directly with sa taxpayer money, no capital generated by themselves as a soe because they are 100% bankrupt. to take it even further, i don’t believe that saa’s original founding statement / agreement would even allow such action currently and especially whilst saa is in such a financial / management crisis

Why indeed…just more anc smoke, mirrors, tender graft and lies!

We are witnessing yet another Corrupt ANC scam job. The strange thing is: they think they can get away with it!!

But wait…. the Post Office now also needs R 8.1 billion bailout. So wondering where the money for these bailouts will come from?

I smell a rat…
Aaah, it’s the ANC corruption stench coming through.
SA taxpayer, get ready to fork out again.

Admitting naivety at the complexity of a SAA deal from a major investor in the business does not augur well. How could you be naive after everything that has happened in the management of the airline over the last three decades?

Was the business plan not court sanctioned? If so where is the compliance with it?

End of comments.

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