South Africa’s government announced Friday it would sell a majority stake in cash-strapped flag carrier South African Airways (SAA) to a consortium that includes the operator of a local budget airline.
The airline, which is emerging from a rescue plan, will effectively be privatized as investors will hold a majority stake.
“Having evaluated the current environment, the government has agreed to the (strategic equity partner) owning of 51 percent of the shareholding and government 49 percent,” Public Enterprises Minister Pravin Gordhan said in an online media conference.
The consortium includes Harith General Partners, an investor in African infrastructure and airports, and airline management firm Global Airways, an aircraft leasing firm that recently launched local budget airline LIFT.
“With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline,” Gordhan added.
The consortium will invest as much as R3.5 billion ($256 million)over the next three years, LIFT co-founder Gidon Novick and Harith CEO Tshepo Mahloele said in an interview.
“Government will have no further financial obligations to the company outside of the existing liabilities that it will settle,” Novick said.
SAA, one of the continent’s largest airlines, was placed under a state-approved rescue plan in December 2019 in an effort to save it from collapse.
The sale of SAA comes about six weeks after the airline emerged from lengthy bankruptcy proceedings, having cut liabilities and reduced its workforce by almost 80%.
Story compiled with assistance from wire reports