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South African Airways is going private

South African Airways (SAA) has been approved for a merger with Takatso Aviation Proprietary Limited – a private investment company that will acquire a 51% stake in the company.

The merger has been approved by the Competition Tribunal of South Africa, the independent adjudicative body that has the power to approve or prohibit large mergers, though it has yet to publish the full report detailing the reasons for the approval, which is required by law, according to Simple Flying.

A new player

Takatso was established with the sole purpose of acquiring a controlling stake in SAA while entering a Strategic Equity Partnership with the national government of South Africa, it said in an official statement.

The investment firm itself is 80% owned by Harith General Partners, a multi-fund manager and investor in infrastructure assets which also has assets in Lanseria Airport in Gauteng.

Harith previously made a bid for both Comair and Mango, the latter of which is a 100% state-owned subsidiary of SAA. During the Mango negotiations, the seller (the South African government) said that it was only interested in concluding a deal that would encompass the entire SAA group.

The newly-formed Takatso Aviation group will therefore acquire a controlling stake of 51%, while the government’s Department of Public Enterprises (DPE) will hold onto the remaining 49% stake.

The company’s stated goal is to develop South African Airways in a competitive market to make it commercially viable and support the country’s economic growth through tourism and other value-chain sectors.

“The SAA of the future will not take from the taxpayer’s pocket through billions of Rand in bailouts, but will instead add to the kitty in dividends for the State, who will hold preference and ordinary shares in SAA,” it said.

Takatso cited that SAA already has an extensive route network and airport slot access and that its home location gives it strategic access to the Southern African region, making it an obvious choice for investment.

SAA’s comeback

South African Airways went into voluntary business rescue in December 2019 following several years of financial losses, and suspended operations the following year during the Covid-19 outbreak.

In September 2021, the South African Civil Aviation Authority confirmed that the company’s air operator’s certificate had been re-issued and that it had restarted flights with an approved fleet of eight aircraft.

Since then, the airline has expanded to once again feature 23 international destinations, and is currently in the process of procuring six new aircraft that should allow for the inclusion of more overseas locations.

These aircraft will be taken out on a 36-month lease, and are expected to come online in September 2023.

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