South African Airways (SAA) and Kenya Airways (KQ) have formed a partnership to support each other’s growth and share strategic capabilities, with long-term plans of co-starting a pan-African airline group.
The two airlines have signed a memorandum of co-operation, that will “take advantage of the strengths of the airlines two attractive hubs”, at Johannesburg O.R. Tambo and Nairobi Jomo Kenyatta, SAA announced.
Kenya Airways insists “this is not a merger but a partnership that seeks to re–organise KQ and SAA assets in to an ecosystem” to achieve joint objectives “that make the South African and Kenyon sector more competitive”.
Allan Kilavuka, Chief Executive Officer at Kenya Airways, said, “The future of aviation and its long-term sustenance is hinged on partnership and collaboration. Kenya Airways’ and South African Airways’ collaboration will enhance customer benefits by availing a larger combined passenger and cargo network, fostering the exchange of expertise, innovation, best practices, and adopting homegrown organic solutions to technical and operational challenges.”
The state-owned SAA, restarted commercial operations after an 18-month hiatus last week. Flight SA317, took to the skies carrying passengers for the first time in over a year, operating from Johannesburg to Cape town on an A320. Struck with financial hardship and exacerbated by the covid-19 pandemic, SAA stopped commercial flights in May 2020 last year. The airline received a ZAR10.5 billion Rand (USD694 million) state bailout. After a prolonged business recuse process, the airline voluntarily entreated, in December 2019. The government appointed rescue practitioners, indicated that the airline had insufficient funds to continue with commercial operations and was at risk of a complete cease of operations. Following on from this state lifeline, the South African government has said it will sell a 51% stake in the airline to a local consortium.
KQ is all too familiar with the financial difficulties that SAA has faced. The airline received KES 11 billion (USD100 Million) from the Kenyan state, after flights were grounded due to the coronavirus pandemic. The struggling airline was severely impacted by the global crisis, resulting in a KES14.33 billion (USD130.5 million) loss, which was reported at the height of the initial COVID wave, in the first six months of 2020. Operations continued to be impacted, with a KES11.49 billion (USD104.6 million) net loss, reported during the first six months to June 30, 2021. Despite a reduction in loses, KQ the projected full year performance forecast for the airline are still grim. Kenya’s government has stated its intention to nationalise Kenya Airways and commencing in the process of buying out the minority shareholders. However, with other national matters taking precedence the draft law that allows the state to take over the 44-year-old airline, has been delayed in parliament.
Is this that start of a new airline alliance, or will the two airlines scrap this partnership due to visionary differences?