Airlink, Safair disappointed by rejection of acquisition plan
Fin24 / Feb 23 2018 12:28 / Carin Smith
Cape Town - Airlink and Safair are disappointed that the Competition Commission has not approved the proposed Airlink acquisition of Safair.
The two independent SA aviation groups approached the Commission in November last year for approval to unite under the common umbrella of the Airlink group of companies.
The proposal submitted to the Commission was that the Airlink and low-cost FlySafair airlines as well as Safair’s other businesses would continue to operate separately under their unique brands. No job losses were foreseen because of the proposed consolidation.
The airlines indicated on Friday that they do not agree with the decision and will approach the Competition Tribunal to consider its application.
Airlink CEO Rodger Foster previously explained that the acquisition would bring opportunities to reduce combined costs and position the businesses for growth. At the same time connectivity would be increased. In his view the deal would make air travel accessible and affordable across Southern Africa.
In the view of Airlink and Safair the Commission's concerns mostly relate to airline operational technical matters. The airlines indicated that they will not elaborate more at this stage in order not to prejudice their case before the Tribunal.
"We firmly believe the proposed transaction will be beneficial, not only for the two companies, but for their customers, employees, suppliers, the local and regional air transport markets as well as the broader South African economy," Airlink and Safair said in a statement.
Airlink had previously indicated that the combined networks of Airlink and FlySafair would enable connections to 37 destinations in nine Southern African and Indian Ocean countries as well as the island of St Helena. In Foster's view, this would stimulate and enable trade, tourism, economic growth and social development in the markets served.
Safair CEO Elmar Conradie had previously stated that coming under a single umbrella would create economies of scale by enabling both airlines to share costs, optimise assets and remove systems duplications. This would position the new Airlink Group for future growth, in his view.
As part of the deal, Safair shareholder ASL Aviation Holdings would have become a minority shareholder of the Airlink Group. ASL Aviation Holdings is a global aviation group with six European and two Asian airlines in addition to its South African interests.
The proposed new ownership structure would have seen Airlink continue to meet broad-based black economic empowerment targets as well.
Airlink deal with SAA
According to a previous statement, the acquisition of Safair by Airlink would also not have affected Airlink's existing SAA franchise partnership.
The business model of Airlink as a franchisee of SAA is a clone of many other successful regional feeder franchise relationships around the world, Foster told Fin24 in October last year. SAA has a stake of less than 3% in Airlink and the two airlines have a long standing franchise agreement.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER