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SAA's wings clipped - again?

News
11 August 2022
When Carte Blanche covered the proposed sale of SAA, one of the biggest questions that remained unanswered was the value of its route rights – the same rights now in danger of being revoked.
SAA

South African Airways (SAA) may have its wings clipped again, soon. That’s if the flag carrier doesn’t provide details of the proposed sale of 51 percent of its shares to the Takatso Consortium within the next 90 days.

The airline, previously grounded for almost two years under business rescue, only resumed operations late last year.

In the most recent development, the Air Licensing Council has threatened to revoke the airline’s licenses and route rights should it not comply. Last week, the council flexed its muscles for the first time and stripped both Mango and Comair of their licenses.

Mango has been under business rescue since last year July and has not operated since. Comair ceased operations last month after spending more than two years in operational business rescue.

Earlier this week, The Citizen questioned how SAA managed to retain its route rights and licenses. Considering it had not operated for almost two years while under business rescue, but emerged with intact rights late last year, aviation analyst Guy Leitch found it curious, too.

Equally, South Africans are also in the dark about the proposed sale of SAA. The Takatso Consortium was announced as preferred partner to assume control of the national airline more than a year ago.

To date, nothing has happened bar the release of the purchase price. For a majority stake in the airline group, which includes SAA the airline, Voyager, SAA Technical and Air Chefs, Takatso will pay the grand sum of R51. It will then proceed to fund working capital up to R3 billion during the two years after cementing the deal.

When Carte Blanche covered the proposed sale of SAA, one of the biggest questions that remained unanswered was the value of its route rights – the same rights now in danger of being revoked.

At the time, SAA’s shareholder, the Department of Public Enterprises, was unable to answer the routes question on camera and deflected it as an operational matter. However, without the route rights and accompanying licenses to operate commercial flights in South Africa, SAA simply becomes a wannabe airline with assets. Essentially, it won’t be able to sell tickets because its aircraft  are no longer licenced to fly anywhere.

Based on Takatso’s response to Carte Blanche at the time, the threat of route rights, and the total value construct of the business, might mean that the bargain of the century may become the greatest faux pas by the Department of Public Enterprises and Minister Pravin Gordhan.

Written by: Hein Kaiser - Carte Blanche Producer / Journalist at The Citizen 

 

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