National carrier merger ‘a long way off’

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, last week, the merger
has long been suggested
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 aircrafttypes
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 TNW 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.
SA 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.
Rodger said the franchise
relationship between SA
Airlink and SAA was unlikely
to be discontinued, as SA
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.