The biggest surprise in yesterday’s announcement of new majority owners of South African Airways came in the name of a key figure behind the airline’s potential rebirth.
Gidon Novik, founder of kulula.com exactly 20 years ago, heads up the innovative new Lift Airlines, a partnership airline management company Global Airways. Now, he is one of the lead figures in the Takatso (“aspire” in Setswana) Consortium, which has been selected as the preferred Strategic Equity Partner (SEP) for South African Airways (SAA).
The Consortium comprises Harith General Partners, a leading investor in African infrastructure and airports, and Global Airways. It will own 51% of SAA, with the South African government owning the remaining 49%.
“The partnership brings together South African public and private sector capabilities to reposition SAA,” said Public Enterprises Minister Pravin Gordhan at a media briefing today. “We have looked long and hard at the proposals submitted, and our clear choice of a preferred partner is the Takatso Consortium. The objective of bringing in an equity partner to SAA is to augment it with the required technical, financial and operational expertise to ensure a sustainable, agile and viable South African airline. SAA will contribute to the venture, the brand, the flag, landing slots, route licences, lounges and a successful loyalty program (Voyager).
“With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline. The new SAA will not be dependent on the fiscus. It will be agile enough to cope with the current uncertainty, and improvement, in global travel. As we recover from the impact of Covid on the aviation industry, African countries will reopen their borders, enabling the movement of people, cargo and trade. We want to relaunch SAA as an iconic South African brand and are confident that we have the right partner to achieve this objective.”
Novik told Gadget that it was essential for an airline in today’s environment to “have an incredibly efficient infrastructure and operating model”.
“It’s a perfect time, possibly in the last three or four decades, to be setting up an airline on a very efficient cost base. So that will be the foundation of the new SAA. But having said that, low cost does not mean any compromise to service or the product that is offered. This will be a company that, at the core of its culture, will be service. We call it an obsession with customer service. And that’s what the new SAA will be about.”
And it will be about technology innovation, of the kind that helped kulula.com disrupt the market by introducing low-cost air travel to South Africa, and that provided the basis for Lift to offer the most flexible flight bookings yet in this country.
“In terms of innovation, I think South Africa has shown in so many respects that we are incredibly innovative and creative as a nation,” said Novik. “We will certainly be tapping into that creativity and innovation, as well as the use of technology.
“We all know where technology is at the moment and the speed at which it’s changing. And we will introduce the latest technology into the airline in every way that it makes sense. So its very exciting to combine all those elements into the new SAA.”
According to a statement issued by the Department of Public Enterprises (DPE), the objectives of the partnership are:
The new owners will not carry any of the massive debt of SAA. Key elements of the partnership, according to the DPE statement, are:
- Ownership: The Takatso Consortium will own 51% of the airline and Government 49%. The intention is to list the airline in the future to address future funding requirements and enable all South Africans to take part in its success.
- Funding: The Consortium provides the required capital. There will be no further burden on the fiscus.
- Operational capability: The Consortium has a significant operational expertise including, aircraft acquisition, operations, IT systems etc.
- Board representation: Board seats will follow the equity interests of the shareholders.
- Management representation: The composition of the Management team shall take into account South Africa’s national demographics and transformation agenda.
- Golden Share: The Government will have a ‘golden share’ of 33% of the entity’s voting rights and certain areas of national interest.
- Pre-emptive rights: Standard pre-emptive rights, rights to match etc., will be included for the benefit of both parties.
- Historical Liabilities: All historical liabilities will be the responsibility of Government within the amount allocated.
- Subsidiaries: As part of the due diligence process, the DPE and the Consortium will carry out a joint assessment on the future of the subsidiaries.
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