Merger of SAA, Mango and SA Express firmly on the table

Last week it was disclosed that SAA’s loss was R.57-billion for the year ended in March – almost double what it budgeted for. (Gallo)

Last week it was disclosed that SAA’s loss was R.57-billion for the year ended in March – almost double what it budgeted for. (Gallo)

The department of Public Enterprises is prioritising the merger of three state airlines: South African Airways, Mango and SA Express.

This was confirmed by public enterprises minister, Pravin Gordhan, in response to a question at a press briefing on Thursday.

“We currently have a situation where SAA, Mango and SA Express all fly to the same destination … Bringing the airlines together and rationalising their routes and rationalising the kind of aircraft needed at a particular time of day … That is the experience we are beginning to learn from different airlines across the world,” Gordhan said noting this would bring synergy and savings.

While the broader strategy must still be worked out, a merger of the three is firmly on the table “certainly this needs to happen”, a representative of the minister’s office told the Mail & Guardian.

A number of considerations were at play, the representative said. For one, the embattled South African Airways remains under treasury’s administration and not public enterprises.

READ MORE: Five reasons why SAA is experiencing turbulence

All three airlines also have their own boards and consideration is being given to whether they would collapse into one. Each is also governed by its own legislation and this would need to be changed. “But there is an urgency to this thing,” the representative said.

SAA is inline for a bailout yet again when, last week it was disclosed that SAA’s loss was R.57-billion for the year ended in March – almost double what it budgeted for.

READ MORE: SAA squanders SA’s prized assets

During Thursday’s briefing on changes of boards at state-owned companies, Gordhan announced a plan to stabilise SA Express.

Part of this is the appointment of an “intervention team”, which has already uncovered some eyebrow-raising payments and flouting of procedure.

The airline has lost a number of its executive managers, several of whom were suspended due to allegations of corruption against them, Gordhan noted. The chief executive officer and chief financial officer are among the vacant positions.

The term of the board came to an end on the May 2018. Cabinet have approved the appointment of a new board which is comprised of people with strong ethical character and the appropriate skills knowledge and experience, Gordhan said.

Later on Thursday the South African Civil Aviation Authority announced it had grounded SA Express over “severe cases of non-compliance that pose serious safety risks” creating more urgency for the new board act.

READ MORE: SA Express suspends operations over ‘serious safety risks’ from today

The plan to merge the three airlines is not new, but it gained little traction under former public enterprise minister Lynne Brown. — Additional reporting by Lynley Donnelly

Lisa Steyn

Lisa Steyn

Lisa Steyn is a business reporter at the Mail & Guardian. She holds a master's degree in journalism and media studies from Wits University. Her areas of interest range from energy and mining to financial services and telecommunication. When she is not poring over annual reports, Lisa can usually be found pottering about the kitchen. Read more from Lisa Steyn

Client Media Releases

Tender awarded for SA's longest cable-stayed bridge
MTN backs SA's youth to 'think tech, do business'
Being intelligent about business data
PhD for 79-year-old theology graduate