Yes, but will relaunched SAA actually fly?

IT’S EXTREMELY rare for governments to make major announcements late on a Friday, just as everyone is settling into weekend stupor mode.

Either war has broken out or, more likely, it’s some devious politician trying to slide something past our TGIF-addled brains. So Public Enterprises Minister Pravin Gordhan’s Happy Hour news on Friday regarding the fate of SAA deserves the scepticism that is slowly overtaking the joy and relief with which it was met.

At first sight, what is there not to be happy about? Not only had Gordhan found a consortium to untangle the dead albatross of SAA from around the taxpayer’s neck, but these nice gentlemen are giving us some magic beans for the privilege of doing so.

And not just a handful. A cool R3bn of them. Sadly, in the thin, mean light of a Monday morning, it was clear that the deal wasn’t quite the financial coup that the Marxist Titans of Wall Street pitched it as.

First, they weren’t actually buying SAA; the R3bn was going to be “put into” SAA over three years, as the consortium’s chief executive Gidon Novick carefully phrases it. Second, the long-suffering taxpayer wasn’t actually getting rid of SAA as a single rusting hulk, but only of the bits that could conceivably be knocked into aeroplane shape; all its considerable existing liabilities remain the Treasury’s responsibility.

And by the way, the 49% that the state retains in SAA does not come with only the golden share privileges that Gordhan is trumpeting – guaranteed “transformation”, SA domicile, and retention of the SAA name – but also the normal, drab responsibilities of any shareholder. In other words, being the final point of call if the new entity runs short and needs a cash injection.

The Takatso consortium would be more accurately described as a suitor than a buyer. It still has to perform financial due diligence – the commercial equivalent of sitting around the bride-to-be’s dowry offering and sniffing about the poor quality of the linen.

One suspects there are lots of grubby undergarments that are going to be snuck into this particular trousseau. SAA’s last set of audited financial statements dates was for 2017, aptly the year that the phrase “state capture” entered our vocabulary with the Gupta Leaks.

Aviation industry experts I spoke to this week were uniformly pessimistic about the long-term viability of the deal. The obvious problem is funding. Airlines burn money, and when the fleet you are inheriting is old and stale, there are daunting cost implications.

In the time-honoured fashion of those heading towards bankruptcy, SAA sold off the most modern aircraft in its fleet when it first hit cash flow turbulence. While it can enter into a so-called ACMI (aircraft, crew, maintenance and insurance) arrangement, this is the start-up and budget airline route, not quite the style of a “flying the flag” national carrier.

However, it would mean outsourcing beyond our borders the flying crew and maintenance functions. That would sit uneasily with Takatso’s commitment to the government to prioritise transformation, especially since the SAA workforce is proportionately, person-to-plane, the most overstaffed in the world.

Another problem is destinations. While SAA was languishing on the ground, Qatar, Emirates and Turkish airlines are among those eating into its most profitable international destinations. Regionally, Kenya, Ethiopia and Airlink have done the same.

That leaves domestic travel, where the market is crowded and the customers jaded.

Despite the expert consensus that the Takatso deal won’t fly, or at least not for long, there was also agreement that if anyone could achieve the apparently impossible with SAA, it is Novick.

It will help that the other leg of the consortium is Harith General Partners, which is chaired by former deputy finance minister Jabulani Moleketi. Moleketi also once chaired the Public Investment Corporation, which holds 30% of Harith.

Whatever the wheels-withinwheels gearing for lift-off, the final decision of whether to fly with it lies with the public. A TourismUpdate poll this week found 16% of respondents would buy tickets in the relaunched SAA, 64% not, and 20% were undecided.