‘Clear distinction between privatisation and investment’: Hanekom says SAA still needs R3bn

South African Airways (SAA) board chairperson Derek Hanekom has rejected claims that the airline will be privatised, despite its need for a R3 billion capital injection.

SAA officials, alongside Transport Minister Barbara Creecy, briefed Parliament’s Standing Committee on Public Accounts (Scopa) about the airline’s financial performance on Tuesday.

SAA needs R3 billion

During the meeting, Hanekom informed the committee that SAA had to delay certain plans due to the collapse of the Takatso deal, which was intended to provide the airline with a R3 billion capital injection.

The Citizen previously reported that SAA was sold for a meagre R51 to Takatso for 51% of the airline’s shares.

The SAA board chair emphasised the need for “serious investment” to support the airline’s long-term plans.

“That form of capital injection could be by way of another investor [or] share equity partner,” he said on Tuesday.

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“We are engaging with banks on not to get a loan at this point but a loan facility as a kind of a buffer because while it is debt free as you said in your opening, the cash reserves are low and makes us quite vulnerable should there be any shock given the funds are not available.”

Hanekom noted that SAA, which entered business rescue in December 2019 and exited in April 2021, faced potential liquidation but was “saved” when a partner was brought on board.

He highlighted that the airline emerged from the business rescue process in a “seriously weakened” state, but has since experienced “steady growth”.

The SAA board chair stressed that there was “real potential value in having a national carrier”.

“The issue of bringing in a share equity partner is the prerogative of the shareholder [the Minister of Transport] but the fact of the matter is if we are going to expand, we will need a cash injection.

“The question is where does the cash injection come from?”

SAA privatisation?

Hanekom also addressed concerns regarding the potential privatisation of the airline.

 “We are not in the situation we found ourselves in when we [were] in business rescue or just came out of business rescue. There is a clear distinction between privatising and getting investment.”

The SAA board chair cited Qatar Airways investing 25% stake in regional carrier Airlink as an example.

“So I think our responsibility under the guidance of the shareholder is to do what’s best for our country, what’s best for our economy and in this specific case, what’s best for the airline.

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“So there’s no question of privatisation; I don’t believe it’s being debated at this stage, but there’s a common understanding that if we are going to grow as much as we would like to grow, there will have to be some kind of investment.”

He stated that SAA currently operates a fleet of 16 aircraft, servicing three domestic routes, 10 regional routes, and two international routes.

“Of course as we add new routes, we would need additional aircraft. The aircraft that we are in the process of acquiring will bring us to 21 aircraft next year.”

Mango business rescue

Earlier, Hanekom provided an update on the future of Mango Airlines, a low-cost carrier and subsidiary of SAA.

Mango was placed in voluntary business rescue in July 2021.

“[The airline] didn’t just go into business rescue for the sake of it, it crumbled. It may have been providing affordable flights for a period, but it was unsustainable and it was running at a serious loss,” he said.

Hanekom stated that Mango’s business rescue practitioner (BRP) has found an investor for the airline.

“It’s not for us to say whether Mango will come back on to the market because it’s in the hands of the business rescue practitioner who seems to be confident that there is a potential buyer of Mango.”

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According to the BRP, Mango’s survival hinges on securing private investment.

However, the proposed sale of the airline faced opposition from the late Public Enterprises Minister Pravin Gordhan, leading to a lengthy court battle.

In March 2024, the Supreme Court of Appeal (SCA) dismissed Gordhan’s application for leave to appeal regarding the proposed sale.

The appeal stemmed from a September 2023 ruling by the Gauteng High Court in Pretoria, which ordered the minister to determine within 30 days whether Mango could be sold to a private investor.