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While the government has announced its wish to merge SAA, SAX and Mango, the implementation could still be a long way off as it is likely the loss-making carriers will require stabilisation prior to merging.
Announced by Public Enterprises Minster, Pravin Gordhan, the merger has long been cited as a potential solution to consolidate resources and cut the enormous annual losses the enterprises clock up.
The minister noted that much could be learnt from around the world about bringing airlines together, rationalising their routes and their aircraft-types needed for particular times of day. He said, (noting the three airlines currently operate a number of flights to the same destinations), the airlines have already begun cooperating, citing SAA’s taking on additional flights and passengers since the grounding of SAX last week. Traditionally this would not have been done.
He was also quoted saying: “There are areas where we can save costs, and while staffing is obviously one of these, we have to discuss this together with our partners.”
A spokesperson for the Department of Public Enterprises told Tourism Update that preliminary work on what a future merger would look like was already underway but a lot of work had to be concluded first in terms of legislation, business models, viability analysis, operations and funding options. He added that due to two of the carriers making losses, government’s priority was to stabilise government aviation assets as a precursor to the merger.
Airlink CEO, Rodger Foster said the airlines’ most pressing concern was to attend to the stranded SAX passengers. He said that it was difficult to speculate on the outcome of a merger saying that because both SAA and SAX were in intensive care, a merger would proceed differently to the process followed by two healthy organisations.
Foster said the franchise relationship between Airlink and SAA was unlikely to be discontinued, as Airlink would continue to provide value to the SAA route network.
Linden Birns, CEO of Plane Talking, agreed that a merger was a long way off. He explained that each airline had its own legislative acts and that a merger could involve months, if not years of parliamentary sessions just to change these acts.
Employment terms and contracts would need to be renewed and realigned including a focus on aligning pilot seniority with aircraft types. The number of aircraft that are operated would need to be reviewed and consolidation of the two aircraft maintenance departments would need to ensure that technicians were specifically qualified to service all remaining aircraft types.
There has recently been speculation about a partnership between SAA and Kenya Airways with Kenya Airways CEO, Sebastian Mikosz, saying this week that he had been in talks with SAA to see what could be done together.