Embattled SAA might be salvaged if it merges with Ethiopian Airlines

Embattled SAA might be salvaged if it merges with Ethiopian Airlines

- A proposed merger could save the South African Airlines

- A merger with Ethiopian Airlines would pave the way for a West-African travel network

- This would result in SAA being privatised and no longer being a state-owned entity

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A plan to merge South African Airlines and Ethiopian Airlines has been in the works for months but has recently stalled. This could be a way to save SAA from going bankrupt.

Ethiopian Airlines has been a huge success, unlike SAA but a merger between the two could result in a West-African travel hub.

Briefly.co.za learned that SAA CEO Vuyi Jarana believes that a merger is SAA's best chance of staying the air, whether it is with Ethiopian Airlines or another airline.

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“Given the thin margin nature of the airline business, under government control or under government rules, it is unlikely SAA will deliver better margin performance. Government should consider exiting the airline business,”
“The biggest opportunity is to grow the West Africa hub together where traffic throughout Africa is consolidated, before connecting to the US and Canada.” - Vuyi Jarana

This would mean that SAA would be privatised and removed as one of the governments SOE's (state-owned entities). This would lift the burden of trying to keep the airline afloat. The government has spent over R40bn in bailouts but has seen no improvement from SAA according to thesouthafrican.co.za.

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The planned merger would have Ethiopian Airlines subletting SAA planes and providing pilots while SAA supplies the cabin crews. This would reduce the number of possible retrenchments which was a the heart of the strike last month.

Whoever takes over at SAA has a steep hill to climb to rebuild the trust in the airline and cover the recently increased wages.

Briefly.co.za recently covered a report on Finance Minister Tito Mboweni mulling over the idea of pulling the plug on SAA rather than burden the South African taxpayer further.

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Source: Briefly.co.za

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