Ethiopian Airlines CEO Tewolde GebreMariam has made clear his intentions for struggling airline South African Airways. In an interview, he outlined the support Ethiopian is willing to give SAA, which appears to be limited to operational support only. While it’s a great offer, without a cash injection of around $600m, SAA will struggle to get off the ground again.
Ethiopian ready to help SAA
In a tweet posted this morning, Ethiopian’s CEO Tewolde GebreMariam pledged the airline’s support to South African, saying it would provide planes, pilots and maintenance to ‘beleaguered rival’ SAA.
Africa’s biggest airline, Ethiopian is willing to provide planes, pilots and maintenance services to beleaguered rival South African as part of a joint venture with that country’s government. Ethiopian Airlines' GCEO Mr.Tewolde GebreMariam pic.twitter.com/VRPOm9K6qK
— Ethiopian Airlines (@flyethiopian) October 5, 2020
The comments had reportedly been made at an interview with Bloomberg. While the offer of operational assistance is evidently being put on the table, the CEO of Ethiopian was clear that he is not interested in helping with debts and costs at SAA. His comments to the publication were,
“We don’t want to deal with the legacy issues — the debt, labor claims and so on because that is very difficult for us not only in terms of financial outlay but also in terms of managing the restructuring. We want to make it very easy for them to start the airline by providing airplanes, by providing expertise, pilots, technicians, leadership.”
South African Airways has been in business rescue since the end of last year. Business Rescue Practitioners (BRPs) had been looking into ways to restart the ailing airline, and were hopeful of receiving financial support from the government by September 17th. The airline required in the region of $600 million in order to pay ticket refunds and for severance packages for approximately 4,000 former workers.
The money was not forthcoming, however. As a result, on September 30th, the BRPs took the decision to suspend all operations at SAA. Funding discussions with the South African government are ongoing, but the airline will not fly again until the money is in the bank.
How Ethiopian could help
The offer from GebreMariam is clear – no money will be pumped into the airline, but support with operations is available should it be required. This could be in a number of forms.
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While South African Airways does have its own MRO arm – SAA Technical – the company operates as a separate business. Indeed, it suspended services to its parent airline in late September over unpaid bills, only reinstating them after payments were made. Ethiopian’s own MRO facility is one of the biggest in Africa and provides services to various third parties as well as Ethiopian itself. While moving MRO to Addis wouldn’t be convenient to SAA, it could mean more competitively priced maintenance services than it can get at home.
More notable, however, is the offer of pilots and planes. Since it had to send back its four A350s, SAA is now stuck with a relatively old and inefficient fleet. Particularly for its long-haul operations, the airline is now reliant on eight A340s, with an average age of almost 17 years. GebreMariam could easily furnish SAA with some efficient A350s or 787s for long-haul, as well as the pilots to fly them.
Earlier in the summer, Simple Flying talked to acting Chief Operating Officer Esayas WoldeMariam about the potential for Ethiopian to step in and help with South African Airways. He told us that Ethiopian is “capable and desirous”, and that it would want to be a part of any vacancy appearing on the African continent.
Now, it seems that the shape of this assistance is becoming clear. It’s a solid offer from the Addis Ababa based airline, but without the cash injection SAA needs to restart, it is, at this time, academic.