South African Airways Deal Takes Hit as Owner Loses Key Hire

Loni Prinsloo and John Bowker
·2 min read

(Bloomberg) -- South African Airways’s proposed new owner said aviation veteran Gidon Novick has resigned from the board, casting doubt over a protracted takeover of the formerly bankrupt state-owned company.

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Novick, a former head of recently collapsed Comair Ltd. -- the local partner of IAG SA’s British Airways -- was intended to provide the industrial expertise to a revived SAA after more than 18 months in receivership. He’s quitting due to concerns about a lack of communication about the progress of the deal and new owner Takatso’s fund-raising plans, he said by phone Monday.

Takatso is a consortium made up of Global Airways, which owns South African domestic airline Lift, and private-equity firm Harith General Partners. The group was unveiled by Public Enterprises Minister Pravin Gordhan as the buyer of a 51% stake in SAA for a notional sum in June 2021, but the deal has yet to be ratified due to regulatory issues and a lack of funding.

Takatso said at the time it would invest as much as 3.5 billion rand ($202 million) through 2024, though subsequent statements have seen the figure drop to about 3 billion rand. Novick hasn’t received any updates on where the capital will come from, he said, confirming an earlier report by News24.

Novick’s departure will come as a blow to Gordhan, who had made the revival and sale of South Africa’s national airline a key tenet of his time overseeing state-owned companies, many of which are in acute financial stress. SAA is flying, albeit with a greatly reduced fleet, workforce and network than when it went into bankruptcy protection in late 2019.

‘Conflict of Interest’

Takatso said Novick’s resignation was related to his role as co-founder of Lift, which represented a conflict of interest.

“Takatso is currently pursuing the SAA transaction’s merger clearance by the competition authorities and seeks to comply with the relevant legislation at all times,” the group said in a statement. “Lift has (independent of Takatso) pursued business relationships with SAA.”

The Department of Public Enterprises and SAA referred questions to Takatso.

South Africa’s government and SAA are being sued by a little-known investment firm called Toto Investment Holdings Pty that lost out on the bidding to Takatso. The National Treasury, opposition parties and media have also criticized the deal due to a lack of transparency and proceeds for the taxpayer. Yet the airline had been a drain on government finances for a decade, receiving numerous state bailouts.

(Updates with name of firm in lawsuit in last paragraph.)

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