The sale and purchase process of a majority stake in South African Airways (SAA) has now been concluded and signed by the Department of Public Enterprises (DPE) and its strategic equity partner for the airline, the Takatso Consortium.

According to a statement issued by the Presidency on Thursday, Cabinet was informed that further progress had been made in the disposal of 51% of shares in SAA to Takatso. It has been more than eight months since the DPE announced Takatso as strategic equity partner for SAA. The deal would enable the State-owned flag carrier to operate without further government bailouts.

"The next step involves the approval of this transaction by various regulatory bodies. The public will be updated on further developments in this regard," the Presidency said. The Competition Commission would likely be one such regulatory body.

Takatso consists of Global Airways, which owns low-cost airline LIFT, and infrastructure investment firm Harith. It is not yet involved in the running of SAA. The proposed SAA deal is expected to see Takatso put R3-billion into the airline over a three-year period to enable it to keep flying.

Harith and Global referred Fin24 to the DPE for comment on Thursday morning. 

According to the national budget tabled by Finance Minister Enoch Godongwana in Parliament on Wednesday, there won't be any additional funding for SAA from State coffers this year.

On Tuesday, a day before the national budget announcement, the DPE indicated the due diligence process regarding Takatso was finalised. On the same day Takatso said negotiations with the DPE were "well advanced".

SAA was in business rescue for more than a year, from December 2019 to April 2021, and started domestic commercial flights again on 23 September 2021. It had stopped commercial flights in May 2020, when the rescue practitioners indicated that there were insufficient funds to continue.

SAA's rescue plan totalled R10.3-billion and did not include money for its subsidiaries Mango, SAA Technical and AirChefs, which were not in business rescue at the time. The DPE, however, asked Treasury for R14-billion to rescue not only SAA but also have funding to keep the subsidiaries going. Then Finance Minister Tito Mboweni, only allocated R10.5-billion to SAA in his medium-term budget in 2020. This led to the DPE obtaining a special allocation from Parliament in early 2021 to take some of SAA's R10.5-billion to help the subsidiaries - which was R2.7-billion in total.

Mango has since gone into business rescue and is looking for a buyer.

Because of the funding "gap", and in order to enable SAA to exit business rescue, a so-called receivership was created to house specific liabilities of SAA, which at the time amounted to about R3.5-billion and included debts to certain creditors in terms of its rescue plan. It is as yet unclear how much of this money is still due to the receivership and where it will come from. Some had initially wondered whether such an allocation would be made in the national budget.

Global Airways has recently applied to have one of its own subsidiaries  - Global Aerotech - placed in business rescue