Global consultancy to manage merger of SAA, Mango and SA Express

Bob Adams via Wikimedia Commons

Her comments at a meeting of the National Council of Provinces select committee on communications and public enterprises provide some clarity on recent contradictory statements on the future of the airlines and whether they would be merged. "There is a merger plan for these companies," Brown said. She conceded the period preceding the merger would be difficult as the firms had to maintain themselves.

The minister said she believed the merger process would take about three years. However, an agreement for the merger of the technical divisions of SAA, SA Express and Mango had already been signed.

Brown said the model for the merger had not yet been decided. A holding company for the three airlines could be created or they could be merged into one entity.

She said another possibility would be to sell a 25% stake in the holding company to a strategic equity partner.

The government also owns about 3% of SA Airlink. Mango, SA Airlink and SA Express all use SAA's code for their operations. A merger would formalise this code-sharing arrangement, the minister said.

Brown stressed the importance of these airlines remaining going concerns. She noted that the National Treasury was reluctant to release the full amount of the state guarantees it had provided to SAA and SA Express.

SA Express CEO Inathi Ntshanga briefed the committee on the airline's operations, saying it was planning to invest in a younger fleet over the next two years. Most of the airline's aeroplanes were about 18 years old and were costly to maintain. The fleet strategy has been approved and the funding for it is under negotiation.

Ntshanga also said the three state-owned airlines were working together to optimise synergies. Regular interaction was taking place with SAA to create a single feeder regional airline for the national carrier.

He outlined the various costsaving initiatives being undertaken by SA Express.

Source: Business Day