In recent years, the aviation world has followed the troubled reorganization process of South Africa’s national airline, South African Airways (SAA). The company, which was already in bad shape before the pandemic, with a bloated structure and financial problems, even had its closure announced by members of the government but was saved by a multi-million-dollar contribution from the state.
As reported by our partner site Aeroin, after months of running only a handful of charter, humanitarian and few scheduled flights with the remaining aircraft, the state-owned company got approval to partner with a private group and sell 51% of its shares.
The face value of the transaction, according to media reports, was just $3, which the Takatso Consortium paid the South African government for control of South African Airways. The government, in turn, assumed huge liabilities carried over from the company’s previous phase.
However, according to a Bloomberg article, South Africa’s National Treasury issued a report citing that the contractual terms were grossly distorted for the buyer. The document had been published but was later taken offline by the South African government. Even so, journalists were able to access the information.
According to the report, the contract has loopholes that oblige the South African government to take on other responsibilities if the private investor so chooses. As could not be otherwise, the matter has generated controversy and it is not yet known how the next steps will be developed.
This information goes against what was announced last year, when the government announced the sale of control of the company. According to the announcement, the state will no longer have any financial obligation to the company after the transfer of control. In turn, Takatso will be required to invest up to US$258 million over the next three years.
