South African Minister of Finance Pravin Gordhan says government has begun consultations on the proposed merger of its two loss-making entities South African Express (EXY, Johannesburg O.R. Tambo) and South African Airways (SA, Johannesburg O.R. Tambo) as a means of cutting unnecessary public expenditure.
Announcing a cautious 2016 national budget, Gordhan said the merged entity, which would operate under a strengthened board, could then court possible investment.
"It seems clear, furthermore, that we do not need to be invested in four airline businesses," he said. "Minister [of Public Enterprises] Brown and I have agreed to explore the possible merger of SAA and SA Express, under a strengthened board, with a view to engaging with a potential minority equity partner, and to create a bigger and more operationally efficient airline."
The airlines, which are both undergoing a restructuring programme, have had to seek state-backed bailouts over the past decade the most recent being in 2015 with SA Express securing a ZAR1.1 billion guarantee while SAA obtained ZAR6.488 billion.
Of government's four airlines, only regional operator Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) and LCC Mango Airlines (MNO, Johannesburg O.R. Tambo) have been consistently profitable.
