South Africa Mulls Merging State-Owned Airlines

February 24, 2016

South Africa will explore merging two state-owned airlines, South African Airways and SA Express, and seek a minority equity partner for the company.

"We do not need to be invested in four airline businesses," Finance Minister Pravin Gordhan said in his budget speech.

"(Public Enterprises Minister) and I have agreed to explore the possible merger of SAA and SA Express, under a strengthened board, with a view to engaging with a potential minority equity partner, and to create a bigger and more operationally efficient airline."

Treasury said the financial position of SAA has deteriorated and in the event of a default, the government would likely be called to pay a portion of its guarantee to the airline, which stands at about ZAR14.4 billion rand (USD$939.3 million).

"Government will seek opportunities to enter into strategic partnerships that allow SAA to draw on private-sector capital and technical expertise to improve its performance and expand its network," Treasury said.