No, it’s not merging with Kenya Airways, SAA says following media report

03 Jan

No, it's not merging with Kenya Airways, SAA says following media report Carin Smith "Kenya Airways will join hands with our partners in South Africa to establish a Pan-African Airline with unmatched continental reach and global coverage," says Kenya's President Uhuru Kenyatta. Gallo Images/Jacques Stander

One of the largest newspapers in Kenya reported that SAA and Kenya Airways will "merge".
SAA clarified on Monday that 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 Kenya's President Uhuru Kenyatta in November 2021.

South African Airways (SAA) and its East African counter part Kenya Airways are not going to merge, SAA spokesperson Vimla Maistry clarified on Monday.

This followed a media report in The Standard, one of the largest newspapers in Kenya, that reported on a prospective merger between the airlines under the headline "Kenya Airways, SAA to merge, President Uhuru says".

It referred to comments by Kenyan president Uhuru Kenyatta.

"To boost tourism, trade, and social engagement; and to bolster continental integration; our national carrier Kenya Airways will join hands with our partners in South Africa to establish a pan-African airline,” Kenyatta said in his New Year address.

However, Maistry said that although plans to cooperate were announced in September last year, a merger is not on the cards.

"The plan is to leverage each other's networks for the benefit of customers – extensive codeshare for example – and leverage operational efficiencies between the two, but the brands will operate independently," said Maistry.

In September SAA and Kenya Airways signed a memorandum of co-operation with the view of creating "a pan-African airline group".

According to a statement by the two airlines at the time, such an "airline group" could, in time, "enhance mutual growth potential by taking advantage of strengths of the two airlines' busy hubs".

The agreement does not, however, preclude either of the airlines from pursuing commercial co-operation with other carriers within their route network strategy.

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

In Kgokolo's view, working with Kenya Airways will harness internal resources and capacities leading to sustainable and cost-effective growth. This includes shared services in the areas of route networks, fleet, maintenance, repair, and opportunities to achieve economies of scale.

A month later, Fin24 reported that SAA and Kenya Airways signed a strategic partnership framework during Kenyatta's state visit to SA. According to a statement issued on behalf of the two national carriers at the time, it is "a milestone towards co-starting a Pan-African airline group by 2023".

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

In a joint statement issued on behalf of Kenyatta and South African President Cyril Ramaphosa on 23 November 2021, the two presidents acknowledged the signing of the Strategic Partnership Framework between SAA and Kenya Airways, stating that it "will ultimately facilitate more trade and investment and enhance people to people exchanges between the two countries and ultimately, the region and beyond".

In May 2021 Kenya Airways signed an interline with South African private airline Airlink to extend its reach in the Southern Africa region.

SAA, which was in business rescue from December 2019 to April 2021, started domestic commercial flights again on 23 September 2021. SAA stopped commercial flights in May last year when the rescue practitioners indicated that there were insufficient funds to continue with commercial operations.

Due diligence of SAA's chosen strategic equity partner, the Takatso consortium, is still under way. It is anticipated that the consortium, consisting of Global Aviation, which operates low-cost airline LIFT, and African infrastructure investment company Harith, will have to invest about R3 billion in SAA over a three-year period.

Kenya Airways responded on Monday to say that the report by The Standard is not accurate.
"Kenya Airways and SAA are not merging but rather consolidating their assets with the long-term goal of forming a Pan-African Airline Group," the airline said.
It pointed out that pre-pandemic data from the International Air Transport Association (IATA) indicated that non-African airlines had more than 60% of all airline "seats" available within Africa and more than 70% of "seats" on intercontinental routes to and from the continent.
"While the other markets have consolidated their aviation assets with three or four big operators, African airlines remain fragmented. We are competing amongst ourselves instead of cooperating. African airlines are sub-scale and find it difficult to compete with much larger airlines with lower unit costs and with better airport infrastructure," explains Kenya Airways.

"The intention is to harness our operations by working together [with SAA] to achieve efficiency and give our customers as many options as possible. Then, there is the benefit of increasing the scale of operations and subsequently reducing unit cost. The upshot is that a Pan-African Airline Group will improve Africa's connectivity, human capital and trade opportunities. By working through such partnerships, the eventual beneficiaries are the customers and the long-term sustainability of African airlines."

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