Kenya Airways, SAA sign deal to form pan-African airline, survive slump in business
Tuesday September 28 2021
A Kenya Airways plane. KQ and South African Airways have partnered to help shore up their battered revenues. PHOTO | FILE | NMG
Troubled Kenya Airways (KQ) and South African Airways (SAA) have partnered to help shore up their battered revenues.
They signed a memorandum of co-operation on Tuesday aimed at forming a pan-African airline.
Kenya Airways CEO Allan Kilavuka said in a statement Tuesday that the mutual co-operation between the two struggling carriers would help in turning around their fortunes.
“The future of aviation and its long-term sustenance is hinged on co-operation. KQ and SAA collaboration will enhance customer benefits by availing a larger combined passenger and Cargo network, fostering the exchange of expertise, innovation, best practice, and adopting home-grown organic solutions to technical and operational challenges,’’ said Mr Kilavuka.
He said the loss making national carrier, which is a subject of state takeover, remains committed to its financial turnaround strategy with pursuit of partnerships being one of its core strategic pillars.
SAA’s interim Chief Executive Thomas Kgokolo said the cooperation between the two airlines, which includes demand recovery and other cost containment strategies, will aid recovery of both carriers in an increasingly competitive African airline environment.
“It will also enhance related Kenya and South Africa tourism circuits, which sectors account for significant portions of respective country growth domestic product, benefiting from at least two attractive hubs in Johannesburg, Nairobi and possibly Cape Town,” he said.
“KQ and SAA, as iconic airline brands of Africa’s biggest and vibrant economies, in East Africa and Southern Africa, respectively, are at the precipice of what could be Africa’s formidable Pan African airline.’’
KQ, which has forecast a grim full-year performance due to the effects of the Covid-19 pandemic, made a net loss of Ksh11.48 billion ($104.36 million) in the six months period to June 30, 2021, down from a net loss of 14.32 billion ($130.18 million) in the same period last year.
The persistent underperformance of the airline has led to huge losses and loss of market share to rival firms.
As a result, the government has opted to nationalise the carrier by buying out the minority shareholders with hopes of turning around its dwindling fortunes.
On the other hand, South Africa’s embattled national carrier emerged from bankruptcy last week, flying its first plane in the last 18 months. It has not been operating flights since March 2020.
The passenger plane flew from Johannesburg to Cape Town on September 23.
According to Aljazeera, SAA, once Africa’s second largest airline after Ethiopian Airlines, had survived for decades on government bailouts and was shedding routes even before the Covid-19 pandemic struck.
The government agreed in June to sell a 51 percent stake to a group of investors called the Takatso Consortium, opening the way to a potential injection of $200 million.
Even after a state bailout of more than $500 million and a restructuring of its debt, the airline only emerged from bankruptcy after slashing hundreds of jobs.