Planned partnership between SAA with Ethiopian Airlines hits a wall

A proposed joint venture between South African Airways and Ethiopian Airlines has been put on the back burner after it was presented to the SAA board in June 2019, the Sunday Times reports.

The plan – which has been seen by the paper – proposes a strategic partnership with Africa’s largest airline, to be located in Johannesburg and managed by top executives from both carriers.

This solution would have seen SAA consolidate its staff and routes, creating a commercial joint venture between SAA and the international airline.

It also lists Emirates and Lufthansa as other possible candidates in a strategic partnership with SAA, but opted for Ethiopian as the best-suited partner.

“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 document states.

“The biggest opportunity is to grow the West Africa hub together where traffic throughout Africa is consolidated, before connecting to the US and Canada.”

Former SAA CEO Vuyani Jarana’s plan to merge operations with Ethiopian Airlines was presented to the SAA board in June 2019, according to the report, which was shortly before his resignation.

‘We would consider it’ 

In October, Bloomberg reported that Ethiopian Airlines Group would consider buying a stake in South African Airways – should South Africa decide to sell equity in the struggling state carrier.

While the ruling African National Congress has frequently said that it would consider selling equity in the airline, there’s been no visible strategy for such a plan, said Tewolde Gebre Mariam, the chief executive officer of Ethiopian Airlines, Africa’s biggest and only consistently profitable airline.

“We are interested in supporting South African Airways,” he said in an interview at Ethiopian’s head office near Addis Ababa airport. If South Africa asked Ethiopian to buy a stake, “we would consider it,” Tewolde said.

Ethiopian and SAA are already partners in the Star Alliance.

Read: The plan to turn SAA around

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Planned partnership between SAA with Ethiopian Airlines hits a wall