Government looks at merging SAA, Mango and SA Express

Government will consider a proposal to merge South African Airways, Mango and SA Express.

Presenting in parliament on Wednesday (11 September), the Department of Public Enterprises said that it has completed a study on the merger of the country’s state-owned airlines.

The study found that that a merger would be beneficial in the consolidation of the three airlines, and would lead to greater cost savings.

It added that the document which supports the consolidation is currently being reviewed by the government’s economic cluster and will soon head to cabinet for consideration.

Acting Interim CEO of SA Express, Siza Mzimela, said that she fully supported the integration of the airlines, but what is of critical importance is how the merger is put together.

Bail out

The decision follows the news that the National Treasury has approved a R300 million bailout for the struggling SA Express.

The airline received a R1.2 billion re-capitalisation in February 2019, however this was ring-fenced to settle government-guaranteed debt only and was not nearly enough to cover the operations of the Governance, Profitability, Operational Efficiency, Customer Value Proposition and Human Capital (G-POCH) strategy adopted by the new board, said Mzimela.

SA Express was thus left with no working capital, since RMB bank, subsequent to settling the debt using the recapitalisation funds, pulled the overdraft facility.

These issues meant that the airline was forced to ground all of it flights at the end of August as it desperately sought financing.

Read: There is a ‘plus side’ to maladministration at Eskom and SAA, says minister

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Government looks at merging SAA, Mango and SA Express