Deputy President of South Africa Not Discarding Possibility of SAA Privatization

South Africa's Deputy President, Paul Mashatile, has signalled a shift in the government's stance towards the future of South African Airways (SAA), indicating that the possibility of revisiting its sale is still on the table. This openness to privatization comes after a near-sale of a majority stake in the national carrier to Takatso Consortium was called off.

In a statement that underscores a changing viewpoint within the government, Mashatile acknowledges the burden of maintaining a state-run airline amidst financial strains. Over the past decade, SAA has been the recipient of multiple government bailouts, reflecting the broader challenge facing many of South Africa's state-owned enterprises (SOEs).

The National Treasury's report to the Standing Committee on Public Accounts (Scopa) revealed staggering figures with R329 billion allocated to recapitalize SOEs such as Eskom, Transnet, the South African Post Office, the South African Broadcasting Corporation (SABC), Denel, and the Airports Company South Africa among others, from 2013 to 2023. Mashatile’s latest remarks could signal a move towards reducing such financial commitments.

In conversation with the Sunday Times, Mashatile questioned the necessity of government involvement in the aviation industry, "I think the government reached the stage at some point where it asked itself a question: do we want to own an airline, what’s the point?" He further suggested that allowing the private sector to invest in and revitalize these SOEs could be the answer to their financial distress.

Despite the seeming about-turn on the Takatso Consortium deal, due in part to a dispute over the airline's valuation, the Deputy President's stance highlights a pragmatic approach. This is further cemented by the Minister of Public Enterprises, Pravin Gordhan's declaration that SAA will not be a candidate for future bailouts. Gordhan's insistence that the airline "must run its operations as efficiently as it can and as profitably as it can, and sustain itself as we go forward" aligns with Mashatile’s sentiments.

The deputy president’s comments come on the heels of an uphill battle for the national carrier, which saw its valuation shoot up to R1 billion and its property assets to R5.5 billion, as reported by Ch-Aviation. This figure marks a significant increase from the R2.4 billion valuation during its business rescue phase just three years earlier.

Although the final decision on SAA’s future remains in the air, Mashatile's open consideration of privatization suggests that the winds of change may be blowing for South African SOEs. The strategy focuses on establishing self-sustaining entities and freeing up state finances for other pressing needs. As the government wrestles with economic pressures, the narrative around SAA and similar entities continues to evolve, setting the stage for potentially transformative developments.