Bain to pilot SAA, Mango merger

An SAA plane at OR Tambo in Kepmton Park Gauteng. Photo: Leon Nicholas

An SAA plane at OR Tambo in Kepmton Park Gauteng. Photo: Leon Nicholas

Published Jan 11, 2017

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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.

Read also:  Corruption rife at SAA, says fired-up Myeni

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.

BUSINESS REPORT

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