The Termination of the South African Airways Sales Agreement

Recently, the South African government made the decision to terminate the sales agreement for state-owned South African Airways that was entered into almost three years ago. The Department of Public Enterprises had planned to sell 51% of the carrier to an investment consortium called Takatso. However, the deal fell through due to the inability of the parties to agree on a revised transaction price after the value of SAA increased.

In the negotiations, it was made clear that the revised transaction structure must take into account public interest and fair market price. Unfortunately, these requirements were not met, leading to the termination of the sales agreement. The original agreement was reached in June 2021 when the airline was appraised at a liquidation value of 2.4 billion South African rand. However, a more recent valuation determined the airline to be worth 6.5 billion rand.

Following the termination of the sales agreement, the government has expressed its intent to explore alternative financing options for SAA. Additionally, an aviation strategy advisor will be brought on board to support the SAA board. Despite the setback, the Department of Public Enterprises remains confident that SAA will continue to operate and expand its routes and fleet.

The termination of the South African Airways sales agreement highlights the challenges faced by the airline in its efforts to secure funding and restructure its operations. Moving forward, it will be crucial for SAA to find alternative financing solutions and develop a sustainable business strategy to ensure its continued growth and success in the aviation industry.