Competition Tribunal hearing into the SAA-Takatso merger underway

Day one of a two-day hearing into the merger between Takatso Aviation Consortium and South African Airways (SAA) is underway at the Competition Tribunal in Pretoria.

Last month, the Competition Commission recommended the tribunal approve a 51% disposal of SAA shares to Takatso provided that certain conditions are met.

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Conditional approval

The first condition includes removing minority partners (Global Aviation and Syranix) from the consortium to avoid decreasing competition in the domestic airline market.

Global Aviation and Syanic jointly own Lift Airline and a 20% stake in Takatso. There are fears that if the two companies are allowed to retain their stake in Takatso, they would have access to “competitively sensitive” information.

In terms of the deal, the consortium would obtain 51% of SAA shares and provide a capital injection of R3 billion over two years, while the state keeps 49%.

ALSO READ: Lift must go for Takatso-SAA deal

The commission’s principal analyst, Wiri Gumbie, told the tribunal that Takatso Aviation was created specifically for this acquisition and is bidding to acquire SAA operations, SAA Technical and Air Chef.

But the consortium was not bidding for its now-defunct Mango Airline subsidiary.

The second part of the deal includes a “moratorium on merger-related retrenchments and to maintain a minimum number of employees at SAA.”

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Recently dismissed Public Enterprises Department director-general Kgathatso Tlhakudi remains vehemently opposed to the merger over corruption allegations. He is expected to make submissions as the hearing progresses.

Once concluded, the tribunal is expected to decide whether the merger can proceed, but its decision is not legally binding and can be challenged in court.