Merging company

No, not about merging with Kenya Airways, SAA says following media report

“Kenya Airways will join forces with our partners in South Africa to establish a pan-African airline with unmatched continental reach and global coverage,” Kenya President Uhuru Kenyatta said.

Gallo Images / Jacques Stander

  • One of Kenya’s largest newspapers reported that SAA and Kenya Airways will ‘merge’.
  • SAA said on Monday that the planned cooperation between the two state-owned airlines, however, does not mean that they will merge.
  • SAA and Kenya Airways signed a “strategic partnership framework” during a state visit by Kenyan President Uhuru Kenyatta in November 2021.

South African Airways (SAA) and its East African counterpart Kenya Airways will not merge, SAA spokesperson Vimla Maistry said on Monday.

This followed a report in The Standard, one of Kenya’s largest newspapers, which reported on a potential airline merger under the headline “Kenya Airways and SAA to merge, President Uhuru says“.

He referred to Kenyan President Uhuru Kenyatta’s comments.

“To stimulate tourism, commerce and social engagement; and to strengthen continental integration; our national carrier Kenya Airways will join forces with our partners in South Africa to establish a pan-African airline ”, said Kenyatta in his New Year’s Address.

However, Maistry said that although cooperation plans were announced in September last year, a merger is not being considered.

“The plan is to leverage each other’s networks for the benefit of customers – extended code sharing for example – and leverage operational efficiency between the two, but the brands will operate independently,” said Maistry.

In September, SAA and Kenya Airways signed a cooperation protocol to create “a pan-African air group”.

According to a statement from the two airlines at the time, such a “group of airlines” could, in time, “improve the potential for mutual growth by taking advantage of the strengths of the two airlines’ busy hubs”.

However, the agreement does not prevent any of the airlines from continuing commercial cooperation with other carriers as part of their route network strategy.

SAA interim CEO Thomas Kgokolo said at the time that part of the airline’s broader growth strategy was to become a major player in regional travel and enable business and commerce on the continent.

In Kgokolo’s view, working with Kenya Airways will harness internal resources and capacities leading to sustainable and profitable growth. This includes shared services in the areas of road networks, fleet, maintenance, repairs and opportunities for economies of scale.

A month later, Fin24 reported that SAA and Kenya Airways signed a strategic partnership framework during Kenyatta’s state visit to South Africa. According to a statement issued on behalf of the two national carriers at the time, this is “an important step towards the co-start of a Pan-African airline group by 2023”.

The two airlines said at the time that they would work together to increase passenger traffic, freight opportunities and general trade in South Africa, Kenya and the rest of Africa. The partnership is also expected to improve the financial viability of the two airlines, while offering competitive prices for the passenger and freight segments.

In a joint statement issued on behalf of Kenyatta and South African President Cyril Ramaphosa on November 23, 2021, the two presidents acknowledged the signing of the strategic partnership framework between SAA and Kenya Airways, saying that it “will ultimately facilitate further trade and investment and will improve person-to-person exchanges between the two countries and ultimately the region and beyond ”.

In May 2021, Kenya Airways signed an interline with the private South African airline Airlink to expand its reach in the southern African region.

SAA, which was on corporate bailout from December 2019 to April 2021, resumed domestic commercial flights on September 23, 2021. SAA halted commercial flights in May of last year when rescuers said it there were not enough funds to continue its business operations.

The due diligence of the strategic partner chosen by SAA, the Takatso consortium, is still ongoing. It is expected that the consortium, made up of Global Aviation, which operates low-cost airline LIFT, and African infrastructure investment firm Harith, will need to invest around R3 billion in SAA over a three-year period. year.

Kenya Airways responded on Monday to say that The Standard’s report is not accurate.

“Kenya Airways and SAA are not amalgamating but rather consolidating their assets with the long-term goal of forming a pan-African airline group,” the airline said.

He pointed out that pre-pandemic data from the International Air Transport Association (IATA) indicated that non-African airlines had more than 60% of all available air “seats” in Africa and more than 70% of air “seats”. “Seats” on intercontinental routes to and from the continent.

“While other markets have consolidated their aviation assets with three or four major operators, African airlines remain fragmented. We compete with each other instead of cooperating. costs and with better airport infrastructure ”, explains Kenya Airways.

“The intention is to operate our operations by working together [with SAA] to achieve efficiency and offer our customers as many options as possible. Then there is the advantage of increasing the scale of operations and therefore reducing the unit cost. The result is that a Pan-African Air Group will improve Africa’s connectivity, human capital and business opportunities. By working through such partnerships, the potential beneficiaries are the customers and the long-term sustainability of African airlines. “

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