A Kenyan Wall Street Exchange report suggests , Kenya Airways (KQ) and South African Airways are collaborating to form a pan-African airline.
Africa’s aviation industry is highly fragmented. The continent has hundreds of small airlines, many of which are on the brink of collapse as they struggle to compete effectively with big global carriers.
For sometime now , Ethiopian Airlines has become continent’s largest airline by fleet size, passenger numbers, revenue and profit — a success story that has left its main competitors, South African Airways and Kenyan Airways, languishing in its contrails.
Airlines are trying to innovate and looking to consolidate to make the businesses sustainable. Probably, this is one of the factors that has propelled these two African carriers to come under one umbrella , making the best use of synergies and compete against big competitors.
However , the journey won't be an easy one , a compilation by Vincent Owino and Anthony Sitti indicates that Kenya Airways had total liabilities of $2.15Bn by June 2022 , while South African Airways liabilities reached $1.49Bn by March 2018.
In September 2021 , both the carriers had signed a Memorandum of Cooperation under a partnership that had a longer-term view for co-starting a Pan-African Airline Group for mutual growth potential. Below framework was being planned in this regard.
South African Airways and Kenya Airways CEOs sign the memorandum.
Now , It is in the media that Kenya’s President William Ruto and his South African counterpart Cyril Ramaphosa are discussing the plan at a high level.
“We have agreed that that agreement should be progressed forward as it presents an opportunity for South Africa and Kenya to work together to build a pan-African airline,” said Ruto.
President Cyril Ramaphosa said that there is a lot of work going on at the technical level, adding,
“We are committed to ensuring that the agreement that was signed between our two airlines goes forward, and at the technical level, there is a lot of work going on, and we look forward to making sure that the agreement that was signed eventually brings about a Pan-African airline.”
Interesting note here is , South African Airlines is on life support, having already squandered billions in government bailouts. It now requires additional funding to implement its turnaround plan. Kenyan Airlines is also running at a loss, despite its financial restructuring which converted a $2-billion into equity.
