SAA and Kenya Airways: A possibility of a new African airline
The push to create an enlarged airline out of sub-Saharan Africa’s second-and third-biggest carriers - they trail Ethiopian Airlines Group - began last year with a government-level accord followed by an agreement on a strategic framework for the company.
Kenya Airways and SAA are meanwhile collaborating more closely than ever before, Kilavuka said, implementing code-share agreements and mutual lounge access and examining the case for a cost and revenue sharing joint venture on the Nairobi-Johannesburg route.
Kilavuka said the focus is on securing backing from a financial institution rather than an industry partner like a Gulf carrier, as that might compromise plans to split long-haul flights between their respective hubs. The campaign to attract a majority investor for a holding company to be modeled on British Airways and Iberia owner IAG SA is likely to start before the end of the northern-hemisphere summer, Kenya Airways CEO Allan Kilavuka said in an interview on Thursday.
"There has been cooperation in the past but only short-term steps like interlining," the CEO said at the CAPA Airline Leader Summit in northwest England.
Kilavuka said that Kenya Airways needs to complete a restructuring before the new venture can proceed, though a round of cost cuts should be done by June. The government, as the biggest shareholder, is supporting the process but requires the carrier to reduce its network, fleet size, and workforce, Treasury Secretary Ukur Yatani said in his budget speech Thursday.
The government, having been forced into repeated bailouts of the flagship carrier, sold a majority stake to a local jet-leasing company and a private-equity firm last year. It’s also possible that the carriers will take steps to consolidate their alliance membership, with Kenya Airways quitting the Skyteam group or SAA exiting rival Star, Kilavuka said.
Kenya Airways and South African Airways (SAA) are planning a series of investor roadshows to help find a financial backer for a combined airline group they aim to create next year. The governments of Kenya and South Africa plan to take a minority stake in the venture, which has the working name Pan-African Airline Group, Kilavuka said. The Dutch arm of Air France-KLM could also exit its roughly 7% holding in the Kenyan company, he said.
Other areas of cooperation could include joint training and maintenance, while surplus Boeing Co. The carriers are also seeking to recruit a third member from West Africa, most likely in Nigeria, Ghana, Ivory Coast, or Senegal, he said.