Ethiopian Airlines in talks to support the revival of South African Airlines

AFRICA – Ethiopian Airlines Group is among companies in talks with South Africa’s government about potentially offering support to the country’s insolvent state airline.

“Some discussion is taking place between ET (Ethiopian Airlines) International Air Transport Association (IATA) code) and the South African Public Enterprises Ministry,” Tewolde Gebremariam, Ethiopian Airlines Chief Executive Officer said.

“It is at a very initial level and part of a general overview of pan-African cooperation in the aviation world between ET and (South African Airlines) SAA.”

South African Airways has not made a profit since 2011 and has been under a form of bankruptcy protection since last year.

Creditors have approved a restructuring plan, however, the government needs to find at least 10 billion rand (US$580 million) of funding for it to work.

The airline has not flown commercial passenger flights since March when the government imposed a strict lockdown to contain COVID-19.

Much of the funding is likely to come from private financial backers rather than Ethiopian, which would bring more operational expertise to the table, the people said.

Tewolde GebreMariam said talks have taken place in the past but were put on hold. He referred questions about the current situation to Abel Alemu, the airline’s regional manager for southern Africa, who didn’t immediately comment.

The Department of Public Enterprises said it has received as many as 10 expressions of interest from “private-sector funders, private-equity investors and partners.” Those relate to the main airline and its subsidiaries, namely low-cost carrier Mango, catering arm Air Chefs and maintenance unit SAA Technical.

As many as four of the proposals are promising, the DPE’s director general, Kgathatso Tlhakudi, said in an interview.

As well as Ethiopian, there has been engagement between the government and Gulf giant Emirates about its codeshare agreement with SAA.

“Emirates can confirm that it has been in touch with South African Airways for general discussions relating to the codeshare partnership between both airlines,” a spokesperson said.

SAA has lost money for almost a decade, relying on bailouts and debt guarantees from the government. It was forced to ground all commercial passenger flights in March when South Africa closed its borders to contain the pandemic.

International travel remains banned from South Africa for leisure purposes, though domestic flights were recently given the green light as part of a wider economic reopening.

Tewolde said last year the state-owned carrier would be interested in buying a stake in SAA if approached, though that company has also since battled its own severe revenue shortfall due to Covid-19 travel bans.

The Ethiopian Airlines lost US$1 billion in revenue from January to September because of the coronavirus pandemic.

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