/Shutterstock.com Will McBain In a year in which Africa’s airlines continue to struggle against the long impact of Covid-19, the stakes are particularly high for two of the continent’s biggest airlines, which are tentatively pooling their resources in a fight to survive.
Kenya Airways (KQ) and South African Airways (SAA) signed a Strategic Partnership Framework in South Africa last November, which if implemented, is expected to improve the financial viability of the two carriers by cutting costs, increasing the size of the available fleet at their disposal through code sharing, and potentially leading to a new pan-African airline group by 2023.
Kenyan President Uhuru Kenyatta told his listeners during his New Year’s address that KQ and SAA will “join hands” to overcome the economic difficulties they both face. Through the arrangement, tourism, trade, and social engagement in Africa can be boosted, he said. Spokespersons from the airlines have denied that a full merger is on the cards but have talked up the planned cooperation.
Both KQ and SAA have lost market share in Africa to the profitable Ethiopian Airlines over the last decade, while the strategic advantages that Middle Eastern carriers enjoy flying in and out of Africa as a result of cheap fuel, ideal hub locations, and strong support from cash-rich governments, has accentuated problems caused by financial mismanagement, debt and pilot shortages.
“It’s impossible to survive if you don’t have a critical mass, so SAA in its heyday had maybe 30 to 40 aircraft, Kenya Airways has 34 aircraft, and if I look into the future of airlines in Africa, then we have very little chance to survive on our own long-term without continuous taxpayer support, because our size is just too small to be cost effective and to compete on a level playing field with the big guys,” says KQ chairman Michael Joseph.
“We need to have some sort of merger or joint venture arrangement between airlines to give us that critical mass,” he tells African Business .
With the odds stacked against them, KQ and SAA are placing their bets on returning to profitability together, after years of heavy losses and bankruptcy.
The stringent travel restrictions imposed by African governments during the pandemic caused severe revenue losses throughout the last two years, causing a collective loss of nearly $8.6bn in 2021 for Africa’s airlines, according to a report by the African Airlines Association (Afraa).
With 42.3% less traffic volume across Africa from January […]