Bain to pilot SAA, SAX merger
Consultancy firm paid R12.1m to develop airlines’ corporate plan
THE MERGER of state-owned entity SAA with Mango and SA Express (SAX) was gaining traction after the government announced yesterday 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 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 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.
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 R5billion guarantee to continue operating as a going concern, which showed a combined loss of R5.6bn.
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 the balance sheet of SAA.
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.