Cabinet to decide merger of SAA, Mango, SA Express next week

September 16, 2019: Plans to merge South Africa's three state-owned airlines, South African Airways (SAA), Mango and SA Express are at an advanced stage and could come before the cabinet for approval by next week. On September 11, the department of public enterprises said that it has completed a study on the merger of the country's state-owned airlines.

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

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

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

"The airline received an R1.2 billion recapitalisation 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 (Rand Merchant Bank) 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 its flights at the end of August as it desperately sought financing.

The move on integration follows after public enterprises minister Pravin Gordhan announced the government's intention to merge the carriers in May this year.