A ‘credible’ SAA should be part-owned by the public, analysts say
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THE GOVERNMENT should release a further 10 percent stake of its SA Airways (SAA) holding to the public as an empowerment and accountability effort to be credible about the turnaround strategy in which it has given 51 percent to the Tsakato Consortium, analysts suggested.
They said the public needed to have a direct stake in the national carrier to drive the transformation the state has embarked on and also ensure that there was minimal corruption in the airline, which has to date sucked over R50 billion in interventions.
This after Minister for Public Enterprises Pravin Gordhan earlier this month announced that the state was ceding a majority stake in the airline to private investors Tsakato, who currently own the Lanseria Airport in the north of Joburg.
“There would be less state interference and more accountability. The government should release at least a further 10 percent to the public and use the money raised from that for other projects. That should happen as soon as the due diligence has been done, the public would be eager to buy into the airline,” said aviation analyst Phuthego Mojapele.
The initial move has received the nod from business, with Business Unity South Africa (Busa) embracing the decision to appoint the Tsakatso Consortium as the private equity partner for SAA. “We also welcome the announcement that it is the intention to list SAA at an appropriate stage in the future.
“Busa remains steadfast in its position that partnerships between the private sector and government in non-strategic SOEs is the appropriate way to go. This enables injection of private sector capital and expertise into the operations of such SOE’s,” Busa said about the proposed transaction.
The deal by the Tsakato consortium still has to pass muster by the Competition Commission and with it already active in the aviation industry, analysts have expressed concern that it may trigger competition with the smaller airlines competing with SAA.
“The explanation by the minister was silent on where the other entities will fall. SAA has a lot of assets and subsidiaries, we have not heard how the transaction will work with those,” an analyst who preferred anonymity said.
He also reiterated that the biggest stumbling block would come not only from the Competition Commission, but how SAA’s assets, including lowcost airline Mango, would be untangled from the deal.
“When you look at the transaction as is, it is difficult to say what the taxpayer will get out of it. Remember the sale of Telkom, that was clear cut. It was bought off the stock market and the public could participate,” the analyst said.
Phuthego said a renewed SAA still had a lot of ground to cover with the training of pilots and other support staff. “SAA’s market share has been disappearing slowly. There have been problems with the SAA technical section, with the training and payment of pilots. There is just so much we are not clear about on this deal,” he said.
The deal comes as American airline Delta has been making inroads into the South African markets with a direct flight from Atlanta to Joburg on the cards.
Delta is also bemoaning not yet being granted the triangular route that includes Cape Town. Aviation sources said there was little benefit for the local industry in that deal as Delta was well equipped and would for the most part use its own expertise.
BUSINESS REPORT ONLINE