Cape Town – The merger of state-owned entity SAA with
Mango and SAA Express (SAX) is gaining traction after the government announced on
Tuesday that a consultancy firm was overseeing the project.
Minister of Public Enterprises Lynne Brown told
Parliament yesterday that Bain and Company South Africa had been paid R12.1 million
to develop the corporate plan for the merger of the three airlines.
Deputy President Cyril Ramaphosa told the National
Assembly last year that the merger of SAA with SAX and Mango was on track.
However, he would not give the deadline for the completion of the merger.
This was the same sentiment expressed by SAX’s chief
executive, Inati Ntshanga, to MPs last year, which was that the merger was
going well. He also did not indicate to members of the national legislature how
soon the project would be completed.
The disclosure by Brown, through a written parliamentary
reply to a question from the DA, has given the strongest indication by the
government of its intention to implement the merger.
In her reply Brown, said Bain and Company South Africa
had been hired to oversee the project.
“The work to be conducted by Bain and Company South
Africa entails the development of the said optimal corporate structure in line
with the government’s objectives and in cognisance of the industry best
practice,” she said.
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President Jacob Zuma announced in his State of the Nation
Address last February that the three airlines would be merged to form a single
entity in a measure to cut costs and increase profits. Brown refused to comment
further on the matter.
SAA and SAX have suffered billions in losses in the past
few years. SAA for two years failed to submit audited financials in the
National Assembly, which caused a public outcry. However, last year SAA
submitted the financials as it needed a R5 billion guarantee to continue
operating as a going concern, as it showed a loss of R5.6 billion.
A new board has been appointed to turn the airline
around. SAX is also in the same situation as it also missed the deadline to
submit its financials to the national legislature. Mango is the only airline
that appeared to have been performing well in the past 10 years.
But Zuma said the merger of the airlines would strengthen
SAA’s balance sheet..
In its financial statements, SAA said the tough trading
conditions in the industry were part of the losses it incurred in the past two
financial years. SAA was also forced to shut down some of its unprofitable
routes.
Zuma is expected to touch on progress made in the merger
when he delivers his State of the Nation Address on February 9.
Ramaphosa may also raise the matter when the National
Assembly debates the State of the Nation Address the following week.