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FlySafair details new ownership

Cape Town - We now have the details of FlySafair’s recently reported new ownership structure, and they have confirmed that there is only one class of ordinary shares in the new structure, with no differences in the economic benefits or voting rights.

The objections around FlySafair obtaining a South African air services licence pivoted around the requirement to be 75% South African owned. 

In particular it was questioned whether Safair chairperson Hugh Flynn was South African enough, and attention was drawn to the different classes of shares (the shares held by the South Africans didn’t have the same rights as the overseas shares).

In his ruling, judge Neil Tuchten said that there was a “strong probability that Safair is both commercially and legally obliged to defer to and implement any decisions made by its holding companies in relation to Safair's proposed operation ... and that Safair will thus not be in effective control of the proposed new enterprise”.

Safair had been working on a BBBEE deal since April 2013. 

They held off on the implementation of the deal pending the outcome of the court case with Comair as they were worried that it would have an impact on the court case. 

Given that the interim interdict was granted, the BEE deal was then completed as there was no reason not to do it anymore. In fact it was very good reason to buy out Flynn who Comair attacked based on the fact that he currently works in Ireland.

The effect of the deal is that the shareholding now looks as follows:

– 25% Safair Holdings – a 100% subsidiary of the ASL Group of companies (foreign owned).  This is the maximum that is allowed to be held by non-South Africans under the Air Services Licensing Act.

– 25.1% - NdizaSafair – an Employee Share Ownership Plan implemented for the purposes of BBBEE. FlySafair believe this is the largest such ownership deal done in the aviation sector. 

As part of this, the shares of Flynn, which was the major part of Comair’s objections, were repurchased by Safair Operations, effectively taking out the problem with his shareholding. 

The participants of the trust must be permanent employees and have been working at Safair for longer than one year. 

As part of this process Dumisani Mthombeni, who was elected as trustee of the Employee Share Ownership Plan, has also been appointed as director of Safair Operations.

– 49.9% Safair Investment Trust – at the same time E Conradie and D Andrew consolidated their shareholding into an investment entity.  They brought in another director, FW Davidson as investor.

In other aviation news this week SAA rejected the Free Market Foundation’s allegation that it is obsessed with growth, and seemingly linked the participants to those trying to stop new airlines from joining the industry.

“Those behind it are the same individuals who oppose the new entities from joining the industry and operating for they know the consequences. Sadly, this does not in any way serve the interests of the consumers,” said SAA spokesperson Tlali Tlali. 

- Fin24

* Rob Baker is co-owner of South Africa Travel Online. Follow him on twitter on @southafricaTO

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