The Competition Tribunal has approved Takatso Aviation’s acquisition of a 51% stake in South African Airways (SAA), but with significant conditions attached. To ensure fair competition in the market, the watchdog has mandated a moratorium on layoffs and the sale of minority shareholders’ stakes.
In response to the Competition Commission’s recommendation in May to approve the deal subject to certain conditions, the Tribunal issued a brief statement stating that it would provide more detailed reasons for its decision at a later date.
The exit of the consortium’s minority partners, Global Aviation and Syranix, who jointly own LIFT airline, was one of the primary conditions imposed by the commission, an investigative and enforcement body. The commission’s goal was to keep competition in the domestic passenger market from dwindling. Although the minority shareholders have expressed a willingness to sell, they have also expressed regret at having to do so.
According to the terms of the Takatso agreement, the consortium will acquire a controlling 51% stake in SAA and invest R3 billion in the airline over a two-year period. The Department of Public Enterprises (DPE), acting as the government’s representative shareholder, will retain the remaining 49% ownership.
Takatso Aviation is a consortium comprised of Harith, an infrastructure investment firm that owns 80% of the company, Global Aviation, and Syranix, each of which owns 10%. After the deal is formally closed, the consortium will take over operational control of SAA. Furthermore, Takatso has stated that it will not assume any of SAA’s outstanding legacy debt, which currently stands at R1.5 billion.
The Competition Tribunal’s decision is critical for SAA’s future, as the airline has faced significant financial difficulties in recent years, leading to its grounding in 2020. The hope with this deal is that the capital injection and change in ownership structure will pave the way for the national carrier’s revitalization.
The competition watchdog hopes to strike a balance between promoting competition in the aviation sector and protecting jobs and stakeholders’ interests by protecting minority shareholders and prohibiting retrenchments during the transition.
Global Aviation and Syranix’s withdrawal from the consortium is a precautionary measure to avoid potential market concentration and dominance, which could impede fair competition among airlines. f R3 billion into SAA is expected to provide the much-needed financial impetus for the airline’s restructuring and operational improvements. The DPE’s continued involvement as a significant shareholder demonstrates the government’s commitment to supporting the revival of the national carrier.
As the transaction progresses, the parties involved will face a number of challenges, including meeting regulatory requirements and dealing with the complex operational issues that come with restructuring a large airline. However, if completed successfully, this acquisition has the potential to create a more robust and competitive aviation industry in South Africa.
Finally, the Competition Tribunal’s approval of the Takatso transaction represents a significant step forward for SAA’s revival. The deal seeks to balance the interests of various stakeholders while fostering healthy competition in the aviation sector, with conditions in place to protect minority shareholders and jobs. As the airline embarks on a new chapter, it will be critical for all parties to work together to ensure a successful and sustainable future.
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