South African Mega Merger: Mango, SA Express & South African Airways

The South African government has decided to discuss the merger all three of the nation’s airlines, South African Airways, low-cost carrier Mango and regional carrier SA Express. This merger would have clear benefits for all three airlines but would also come with some risks.

Simple Flying
The merger would be between all three of the government-owned airlines. Photo: Simple Flying

What are the details?

The South African government is set to consider a major merger between its three government-owned airlines, as reported by Business Tech SA. The airlines on the table are:

  • South African Airways, the nations international and domestic flag carrier
  • SA Express, a regional carrier that links remote towns and cities, as well as some international destinations.
  • Mango Airlines, the countries low-cost-carrier

All three carriers are actually fully independent but are funded by the government. The new proposal, prepared by the Department of Public Enterprise, was presented to parliament last Wednesday the 11th of September.

This is great news for South Africa Airways and SA Express, both of which have received government bailouts in recent months. SA Express ran out of cash in August and was forced to ground its entire fleet until the government provided an additional R300 million (20.5 million USD).

A340
A South African Airways A340 comes into land in London. Photo: Arpingstone via Wikimedia

What are the benefits?

For one, only having one corporate structure for all three airlines will be a huge cost-benefit for the government. They will need to pay fewer wages (with fewer executives), maintenance can be combined, and each airline can borrow capacity from another if needed.

Additionally, with a bigger fleet and more market presence, the airline will have more power to negotiate a better deal with suppliers. This could lead to a reduction in costs and a renewed focus on getting out of debt.

Speaking about the possible merger to Business Tech SA, interim CEO of SA Express Siza Mzimela mentioned she “fully supported the integration of the airlines, but what is of critical importance is how the merger is put together”

SA Express
SA Express flies regional aircraft on behalf of South African Airways. Photo: Alan Wilson from Stilton, Peterborough, Cambs, the UK via Wikimedia Commons

What are the risks?

With the airlines not exactly performing the best at the moment, linking them together also has the potential to make the house of cards even shakier and put the entire venture at risk.

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With an unfortunate history of corruption, this new entity will have to be super vigilant to ensure that it doesn’t become bloated and allow funding to slip through the cracks.

Mango
A Mango 737-800. Photo: Montague Smith via Wikimedia

What would this mega-airline look like?

The proposal has not actually suggested merging all three airlines into one airline, but rather incorporating the governance and the way they operate into one entity.

However, if they do become one unit, they will have a combined fleet of:

  • SA Express – 24 aircraft
  • South African Airways – 47 aircraft
  • Mango Airlines – 15 aircraft
  • For a total of 86 aircraft flying to a total of 59 destinations.

They might even become one of the biggest airlines in Africa, sliding in between Ethiopian Airlines (117 aircraft) and Royal Air Maroc (59 aircraft).

What do you think about this potential merger? Is it enough to save the airline? Let us know in the comments.

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Cahpek

This feels like government officials who do not know much about the airline business interfering in something they do not know. If the merger goes ahead, would the merged airline be, a full-service airline (like SAA), or a low-cost airline (like Mango)? How would they combine the different contracts of pilots, cabin attendants, engineers, and all other supporting staff of the different airlines? As SAA and SA Express seems to be making losses, would the merger mean there will be job losses? Has anyone made a comprehensive plan how this merger is going to make the merged company become profit-making… Read more »

MK Mnguni

The benefits are there, but I am just worried that the mismanagement will be more difficult to deal with and could result in the collapse of not one, but all 3 airlines.

Janine

Won’t make any difference sell all 3 as greed and corruption are both waiting around the corner to take advantage

Abe

No one’s going to touch those airlines, even with a 20 foot pole. See what happened with Air India’s privatisation effort. Too much debt, too much corruption, too much government interference…

Ian Cox

Some clarification in regards to ownership and operations (AFAIK): Mango isn’t “the countries low-cost-carrier”. There are two others. FlySafair who are owned by Safair (who operate one of the biggest civilian L-100 fleets), flying 17 x B737s. kalula.com who are owned by Comair (who also own the South African British Airways franchise) operate 10 x B737s. It’s a bit of a stretch to say they are all fully independent of each other. Mango is a 100% owned by/subsidiary of SAA, which in turn is of course owned by the South African government. SA Express is different in that it’s directly… Read more »

Roy Mercer

the countries low-cost-carrier????? no, simple singular possessive would be “the country’s low cost carrier”.

Roy Mercer

It’s ticket holders can accrue miles…no apostrophe in simple possessive..”It’s” is short form for “it is”.. ” its” is .similar to “yours, his, hers” etc. . no apostrophe.