South Africa: SAA’s New Wings Undermined By Pending Questions About Its Funding Model

The consortium that plans to buy a majority stake in SAA is yet to raise funding for the troubled airline. There are also questions about whether the Department of Public Enterprises sidestepped the National Treasury when it announced the material transaction.

The potential sale of a 51% shareholding in collapsed and state-owned SAA to a consortium comprising two private sector companies has received a mixed reaction from the public and the aviation and business communities.

The SAA transaction — the first privatisation of a state-owned enterprise since 2003 — has been praised for attracting private sector capital and much-needed aviation skills into the airline. Private sector capital into SAA is important as it would help wean the airline from ongoing government bailouts for survival. The taxpayer has pumped R32.3-billion into SAA over the past decade, while the airline recorded cumulative financial losses of nearly R20-billion over the same period.

Critical questions have been asked about the terms and conditions surrounding the SAA sale since it was announced with fanfare by the Department of Public Enterprises (DPE) on 11 June.

How will the two buyers of the airline fund their purchase of a 51% shareholding (leaving the government with the remaining…

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