The South African government has announced that the country's highest antitrust watchdog, the Competition Tribunal, has approved the proposed sale of 51% of South African Airways (SA, Johannesburg O.R. Tambo) to its preferred strategic equity partner, Takatso Aviation.

The Tribunal has approved the transaction subject to a moratorium on retrenchments and the divestment in Takatso of minority shareholders Global Aviation Operations (GE, Johannesburg O.R. Tambo) and management consultancy Syranix over concerns regarding their ownership of the Lift Airlines brand, which competes domestically with the national carrier.

The Department of Public Enterprises (DPE), in a statement on July 25, welcomed the decision as "a significant step in the government's efforts to consolidate the re-emergence of the national carrier as a key strategic asset". "The Competition Tribunal's decision sets Takatso and the DPE firmly on course to finalise other critical regulatory requirements to conclude the transaction," it added.

Public Enterprises Minister Pravin Gordhan said: "It is very gratifying to see that we are on the verge of having SAA finally infused with the requisite strategic vision, expertise, and capital by Takatso. The approval by the Competition Tribunal also sends a very strong message about the extent of the hard work that has gone into this transaction, considering that SAA was on the brink of liquidation. The steps we have taken will ensure that SAA is returned to profitability and sustainability."

Takatso, led by majority partner Harith General Partners, a black-economic empowerment asset management firm that also owns Johannesburg Lanseria airport, will gain a 51% controlling stake in the South African Airways Group, in exchange for injecting ZAR3 billion rand (USD167 million) in operational capital into SAA over two years, for a nominal ZAR51 rand (USD2.84) purchase price. DPE will be issued ZAR3 billion worth of preferred shares in SAA and retain a 49% equity stake, plus the right to a "golden share", securing a long-term national strategic interest in the airline. The government will cover the rest of SAA's legacy debt, which reportedly still sits at ZAR1.5 billion (USD83.5 million). The transaction will establish SAA as a joint venture between the South African government and Takatso. Still, the government will retain ownership of the SAA name and brand if the venture fails. SAA's key subsidiaries – SAA Technical and Air Chefs – will see key strategic partners acquire significant shareholdings in each entity.

The minority shareholders in Takatso initially vowed to contest their sidelining in the deal but last month agreed to withdraw from the transaction. Their departure was a condition set by the regulator for the conclusion of the privatisation deal, which has dragged on for more than two years. Conflict within the Takatso Consortium became evident in November last year when Global/Syranix director Gidon Novick resigned, saying the minority partners were being kept in the dark about negotiations with DPE for the sale of SAA. Novick said the minority shareholders have started the process of selling their 20% stake in Takatso - through which they would have had an effective 10.2% stake in SAA on deal closure. "We do not want to hold up Takatso's transaction with SAA and perpetuate any further state funding of the airline," he said.

Harith General Partners confirmed the Takatso minority shareholders' divestment must happen before the sale of SAA can be concluded. "Engagements are ongoing between Takatso shareholders, on the modalities for the exit of the minorities," it said. "Other regulatory requirements" and Harith "preparing" to invest ZAR3 billion into SAA operations must also be concluded, it said in a statement.

An outstanding legacy debt lawsuit against SAA by Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) over ZAR890 million (USD50.5 million) in unpaid flown and unflown ticket revenue, was dismissed for the third time by the South African High Court on July 25. It could have thrown a spanner in the works as the government must clear all historical debt.