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SAA sale sets off a storm of controversy

Due diligences still have to be carried out, but there is nothing untoward about the government, as shareholder, entering into closed discussions with prospective buyers.
Selling a 51% stake in a loss-making SOE to a consortium that has expertise in entrepreneurship, raising capital and running an airline is a rational decision, says the author. Image: Supplied

The pending sale of a 51% shareholding in South African Airways (SAA) to the Takatso Consortium, comprising Harith Management Partners (HMP) and Global Aviation, 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 honourable ‘no-nonsense’ Minister of Public Enterprises Pravin Gordhan has drawn a line in the sand regarding debt. 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 we should look back some 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 on the consortium, and on SAA by the consortium, still have to be carried out. It is possible that some value will be put on SAA’s intangible assets, such as the Star Alliance and its brand. Parallel to this process, the route, flight and staffing plan will be finalised. The final step will be the signing of the purchase and sale agreement.

SAA was insolvent and grounded

SAA was hopelessly in debt, and grounded.

SAA Technical, one of SAA’s key subsidiaries and the entity responsible for its maintenance, was unravelling. Mango, another subsidiary, was also facing challenges with creditors.


SAA was placed under voluntary business rescue in December 2019, and this was wrapped up in April 2021.

The business rescue partners (BRPs) informed the Standing Committee on Public Accounts (Scopa), at its meeting on March 25, that liabilities and claims had been reduced by R35.7 billion through a compromise negotiated with concurrent creditors and lessors, and that SAA’s workforce had been reduced from 4 700 employees to 1 000. Further, membership of the IAA Star Alliance had been retained.

Audited annual financial statements

SAA’s last set of audited financials is for the year ended March 31, 2017.

The auditor-general did not conduct any audits during the business rescue process.

Draft financial statements for the years 2018 and 2019 were submitted to parliament in 2020 by the BRPs.

At the Scopa meeting held on March 25, it was apparent that the financial statements for the year ended 2020 had not been finalised, and the 2021 financials are now due.

The auditor-general will be tasked with auditing four years. Taking into account that the auditor-general will have to find audit evidence to verify the figures in the financials, this is going to be an onerous task.

Background to the deal

Selling shares in SAA is not unprecedented.

In the 1990s SAA was held by Transnet. Transnet sold 20% of its shareholding in the airline to Swissair for R1.4 billion in June 1999. The government repurchased the shares in 2002.

The government has previously brought up the possibility of public-private partnerships as a solution to loss-making state-owned entities (SOEs).

As shareholder, the government, and in this case the DPE, may enter into closed discussions with prospective buyers. There is nothing untoward about this.

Unfortunately, we have been scarred by state capture and the backroom deals made between crooks – but selling a 51% shareholding in a loss-making SOE to a consortium that has the expertise in entrepreneurship, raising capital and running an airline is a rational decision.

In 2020 the DPE met with various interested bidders, including Gidon Novick, who is CEO of Global Aviation. Novick is former joint-CEO of Comair and founder of He also served as CEO of Discovery Vitality, founded venture capital platform Lucid Ventures, and recently launched Lift Airline.

Read: Gidon Novick’s Lift takes to the skies (Dec 2020)

In a telephonic discussion with Moneyweb on June 15 Novick confirmed that he and his aviation team commenced discussions with the DPE in 2020 and had made recommendations regarding SAA’s future.

He was under the impression that several bids had been made.

He and his team envisaged the new SAA as a start-up, and had in mind a very agile innovative model from a cost point of view. But there will no compromise from a safety 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.”

Novick was put in touch with HMP, which he said had previously put in a bid for Comair, and they formed the consortium.

At the public announcement of the consortium Novick said that this is the best time to start an airline – “legacy models are being challenged, and they are flawed in many ways”.

He also mentioned that there are incredible opportunities right now. “One can access aircraft at affordable prices, and can source unbelievable talent.”

The consortium will prioritise the training of black pilots.




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Polishing a turd?
Now it is called ‘prospective buyers’. Earlier it sounded like a done deal. SAA is just where it was before. Nowhere.

Pravin needs to publish the sale agreement and all side agreements so we can see what guarantees had been given to the preferred comrades as to funding. To keep it vague that taxpayers pick up historical debt is not enough. Yet another potentially corrupt deal done, and now trying to put some positive spin on it. Cyril is a weak weak leader – – – must have massive skeletons in his cupboard to allow this to happen

SAA is like that beaten down minibus taxi that everyone has possessed and sold to the next pavement small business guy.

Everyone has taken it for a spin around the block.

On the other hand,I made a few overseas trips with SAA, albeit about 3 years ago.
No complaints. Staff friendly and professional.
What do you expect from a 12 hour flight ?

Chris I for one will never fly SAA again. the service was bad and now what sort of financial support will they have to keep SAA in the sky?

I recently flew BA/Comair and the service was excellent. Oh and did i mention very reasonably priced.

And note that the article makes no mention of the government’s supposed 33% Golden Share (which still gives it full control of SAA). This is a SCAM “Deal” in addition to a “Nowhere Deal”.

The last line says it all ” the consortium will prioritise the training of black pilots” !!!
That’s the priority!!!
Are prospective passengers happy to fly with Pilots being trained upfront!!
This whole thing is another BEE shambles :Be like Taxis except in the air !! If they ever manage a takeoff .
It will fail miserably :

I profoundly disagree.

I think it will fail gloriously.

Jeepers old man, take a breath and adjust your glasses! You keep hitting : instead of . and randomly holding shift. Signs of uncontrolled high blood pressure.

The debate is getting heated up, I agree,
take it easy guys, your health is more important.

It is just another SAA joke, there is more to come.

Don’t worry Boet, flying is mostly automated.

They just press a few buttons and then look good.

Catch a beer and chill

There was an article on this website relating to the training of black pilots at SAA. SAA spent millions and had very few complete the course to become pilots (I believe it was 3, average cost to normally train a pilot was R 1 million, but the cost to train black pilots in this specific program was exponentially higher).

The next program should apply better vetting to applicants considering the cost associated with their training, or alternatively they can carry on like this and keep trying to push that piano up the stairs.

I just have one question: Did the government or PIC lend the money to the Takatso Consortium, to buy the shares? If so, what happens if they don’t repay? Then it’s nothing other than another government bail out masked as a privatization deal.

The purchase price has not been disclosed but is probably a token R1 or similar. The money mentioned is capital to be injected INTO SAA for future operations.

Precisely what it is. These boys are getting better at this corruption thing everyday.

what did Gary say? “The more I practice the luckier I get” same here.

It should be the other way round – carry the losses and share in the profits – this reminds me of the ”Randgold hedge” that Investec sold Western Areas – Investec got all the margins and Westerb Areas got buried with the ”naked hedge” when the Gold Price spiked!

The ”dawn must be nigh” on the Rand gate – Investec-gate High Court ruling by Judge Basson !

I thought journalists were meant to be unbiased. Meant to hold powerful people’s feet to the fire. But no, not this fawning apologist masquerading as a journalist.

“The pending sale … has set off a storm of controversy and conspiracy theories.” – Yep, anyone doing any actual investigation and asking questions must be a conspiracy theorist. Is the 30% PIC holding in Harith Management a conspiracy?..

“The honourable ‘no-nonsense’ Minister of Public Enterprises Pravin Gordhan” – Yikes.

“As shareholder, the government … may enter into closed discussions with prospective buyers. There is nothing untoward about this.

Unfortunately, we have been scarred by state capture and the backroom deals made between crooks – but selling a 51% shareholding in a loss-making SOE to a consortium that has the expertise in entrepreneurship, raising capital and running an airline is a rational decision.” Why is it loss-making, Barbara? Why was it bailed out continuously? Why do you acknowledge that we’ve been scarred by state capture but then call it a conspiracy theory to suggest that the government’s “49%” stake in SAA is actually untrue (given the PIC’s 30% holding in Haritha)?

“The consortium will prioritise the training of black pilots.” – No journalistic comment/commentary on this one? Just letting that pass? Ok.

Pathetic puff piece designed to manipulate the reader’s opinion instead of inform.

An additional point: “Novick was put in touch with HMP …..”! Some people knew something and some backroom dealing was done.

Good points.
“Journalists” are in fact praise singers of the money interests that they serve these days, and this piece is the most obvious ones.
Full of “what-aboutisms” like Swissair and OK Bazaars, but not a single mention of the PIC role in all of this. Not one word, and we dare not mention one word because then we are at risk of being called “Conspiracy theorists”.
This smudge coukd have been written by Minister “No Nonsense” himself.

Touché … in spades!

Lebashe Group owns Arena Media Holdings who owns Moneyweb. Tsehpo Maholele sits on the Lebashe Group board, as well as Harith Partners. The article above is bound to be favorable to the deal and the people involved in the deal. There should be a disclaimer that highlights this relationship.

Also very disappointed. Ms Curson has written hard-hitting reports in the past, which makes this piece of sycophanty all the more inexcusable. Read Jonathan Katzenellenbogen in the Daily Friend for a proper unpacking of this smoke and mirrors deal.

Agree with these comments 100%. Journalists promoting the ANC’s smoke & mirrors like this should be sanctioned. Money-web, take note, if you want hard working, tax paying readers to support your organisation financially, you may have to find real journalists…

How will we know if the pilot up front is black or not? Will a 30% pass rate apply?
I feel many SAA passengers will find some religion as paying customers on this wreck…..

Some questions, Barbara;

1. You foresee the possibility that “some value” might be placed on SAA’s brand. Many feel brand SAA is about as damaged as brand Bell Pottinger and brand Gupta and refuse to set foot on a SAA and Mango flight, ever! So at best the brand is “Most Controversial” – do you agree?

2. But ignoring the brand for a moment, a factor that is sure to put many “bums on seats” and boost financial viability is government’s age old policy that all civil servants on local and international business trips MUST fly SAA. This policy will surely have been an attractive feature to any bidder like the current one. (How fair that might be to private airlines like Comair and Safair, is a good question perhaps for the Competition Commission.)

3. And are audited financials part of the due diligence process, or not?

Otherwise interesting article.

The “minister”??? Hahahaaa

He announced the deal speaking with “great authority”. As he has done for the past decade and all his “great authority” and knowledge proofed to actually be blatant stupidity.

He knows nothing and is just a common communist. TSK!!!

Most of these communists aren’t actually communists, they just thieves pretending to be communists

You know there is no difference between the two, I hope?

This is the best ” no nonsense Minister ” Gordhan can come up with ?
Smoke and mirror stuff. Looks like we have a new government praise singer in Barbara Curson.

Barbara, are you paid by both Moneyweb and Min Pravin?

With SAAT non-existant and “new” pilots joining SAA, you are risking your life flying with these incompetant idiots.

Just another government disaster.hope they fail comepletely!sell the planes for scrap.wouldnt fly with them if you pay me.

What about the tender process that needs to be followed with SOE’s ?

I must agree B that this piece reads like it was done by some ANC faithful flunkie and is nor your normal excellent incisive stuff.You must have had a brain freeze calling the useless Gordhan honourable and no nonsense. Yikes!! Pure ANC propaganda speak. G is the same clown who gave billions in not bailouts to SAA and billions in bonuses and increases to ESkom. All of taxpayers money.

Novick’s success with brands Kulula, Comair, Discovery Vitality, spells hope for the future of the airline. If the Government can indeed find a way to rid itself of the SOEs hollowed out by corruption and cadre management, see them grow into successful institutions, and ensure no interference with the financial and fiduciary controls… well, that’s a good thing, and I trust Barbara’s skill at analysis.
But if the Government retains a controlling hand in policy, like, insistence on adhering to the BBEE hallucination in the pilot lineup… well, that’s a scary thing. I won’t want to fly in an airplane being used as a training pod for the fast tracking of aspirant pilots, whatever color they are. Safety is non negotiable! It was just a consignment of vaccines at risk in February when the inexperienced pilots miscalculated the take off weight of the Airbus, but that incident is indicative.
While talking inexperienced pilots, has an insurance company stepped up to cover any future “mishaps”?

The reason for that mishap was cause the official loadmasters for that airtype were on strike and his bee assistant thought he could handle the bosses job no problem….. Just take yr hat off to him for how bad he messed that calculation up….. That was for a load of not even 1 ton – in a plane that has a max load of 20 ton……..if that almost took down the plane, Just imagine him now doing the math for a fully loaded flight.

Actually it was the flight crew’s mistake – entering the incorrect weight in the flight managment system which caused the flaps to be retracted at too low speed reducing lift and almost stalling. The pilot in command was the politically correct acting chief pilot, as the real pilots (including training pilots) have been locked out. Airbus automated system saved them.
No one with half a brain will get on an SAA plane -unless its a cadre freebe.
Dissapointing article from B Curson, normally very sharp. She is right
about something though – they had better prioritise pilot training- for the existing “pilots”

The SAA story sounds like that of a 50 year old beaten down Minibus being flipped to every pavement dealer.

I do not know why any educated person will even discuss the SAA story.

“Honourable Minister”…”nothing untoward”… since when is there nothing untoward the sale of public assets using PIC money without an open and transparent process???? Or are all governance processes off the table because a different ANC cabal is in charge?

Who pays this “journalist” to write ANC propaganda?

fantastic question. The propaganda arm of the government is working overtime here. Hope she’s at least getting paid well for the service..

Interesting business model – no mention in the M&A mashup of the potential clients needs in a post-COVID world, with the goodwill of the brand decimated. That means SAA will only compete on price and have that single value proposition. That presupposes that this hybrid monster will now have razor sharp efficiencies to take on world-class operators like SAFAIR who seriously compete on price? Its simply impossible. A second client factor is people like myself and I’m sure almost everyone who reads these pages – we are the potential clients. Will we fly this ANC airborne proto-virus? Not in a million years. So clever M&A wizards and boardroom backslappers and sharp suited bankers. I’m a client and I’ll never get into your CadreCoffins. I’ll tell you that not a single friend of mine ever will too. Good luck. You’ll need it

Oh yes, Safair and Comair are always tops! Use them all the time!!!

I hope the new management and board pursue civil claims in the name of SAA against those parties responsible for scarring SAA through ‘… state capture and the backroom deals.’

It would be satisfying to see the estates of individuals excussed and corporates in liquidation proceedings. The facts and allegations around state capture and backroom deals have not changed, but the management team and board will have changed, and they should be encouraged to proceed with civil proceedings, including against the State as the sole shareholder.

Not sure how the proceeds of the civil claims can ever find their way back to the SA taxpayer, but destroying the lives and livelihoods of perpetrators and their families, within the law, will be a win for South Africa.

You’re daydreaming to think the new management will bother with civil claims against the thieves at SAA and co.

They’ve got a job to do to operate an airline

The best you can hope for is for the NPA to successfully prosecute the guilty. But the ANC stole so much that the NPA is left without enough resources to do its job properly!

They’re in the club now – they’ll never point fingers at the drivers of the gravy train that are giving them their turn

It is hard for anyone who has followed the events that lead to the demise of SAA to be optimistic about the success of this proposed sale of shares. How can it be when the real cause at the heart of the problem, namely BBBEEE, has been blatently ignored?
Just down the road is a filling station associated with one of the biggest oil companies in the country. It had a turnover in fuel sales probably unmatched anywhere in the city and was even used in a Television advert once. About a year ago, in accordance with prevailing policies, the white owner sold to a new black businessman. It lasted for about six months and has been out of operation for months now affecting the fast-food outlet on the premises to the point where it has now closed its doors too.
I am all for giving the other fellows a leg up but when you give it to someone with no expert knowledge other than the right connections you are simply throughing pearls before a pig!

What a shameful bit of journalism. You and Carol Paton from Business Day appear captured. You need to up your game.

I’m pretty sure that some of the Harith directors are amongst the owners of BD etc.

What if they don’t even want to fly SAA?
They know the brand is gone.

Me Thinks that they just want a slice of the Pensions kitty.

Me Thinks that they see all those zeros in the pension fund and they came up with a scheme to get some.

Would not be surprised if SAA will never fly again, or just token flying…

My guess is that the smoke and mirrors is to cover up that all ANC government oaficials (including SOE’s and municipalities) will be obliged to fly “SAA” and their employers will be charged whatever SAA decides. The PIC will fund the show, directors and senior management will become multi millionaires (Myeni) and things will stagger on. Until, Zim and Venezuela style, the money runs out. Not that all involved from Ramaphosa and Gordhan down will care; they will be sitting pretty; some in Canada or wherever. ‘Tis the way of the third world.

Maybe they intentionally ran SAA into the ground, so they could capture it via a distressed /insolvency sale.

Oldest business trick in the book.

Make money looting it on the way down, and then make money offloading it. Same thing is happening with Eskom

All the secrecy about this deal and all the “loose ends” indicates that it is really another SCAM in the making. I wonder which comrades will get the cream this time.

End of comments.





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