South Africa should act to preserve its insolvent national airline and seek to partner the carrier with Ethiopian Airlines Group, according to a study commissioned for ruling-party lawmakers.
The assessment, obtained by Bloomberg, was prepared by African Aviation Services Ltd. and dated October 4. It was presented to a group of African National Congress lawmakers on Monday, according to an ANC official who asked not to be identified because the information isn’t public.
South African Airways went into administration in December and now needs more than R10 billion ($603 million) to restart, according to a plan produced by the carrier’s business rescuers. The airline hasn’t made a profit since 2011 and has been surviving on government bailouts.
“There is inherent value in an existing airline which cannot be easily replicated in a new replacement carrier,” Nick Fadugba, the CEO of African Aviation and the author of the study, wrote in the document. “After a thorough analysis, our preferred strategic equity partner for SAA is Ethiopian Airlines.”
Ethiopian Airlines shares a similar “pan-African vision” to SAA and is Africa’s strongest carrier, Fadugba wrote.
Fadugba declined to comment when called by Bloomberg. Department of Public Enterprises spokesman Sam Mkokeli couldn’t immediately comment and ANC spokesman Pule Mabe didn’t answer his phone or respond to a text message seeking comment.
Ethiopian Airlines is willing to provide planes, pilots and maintenance services to SAA, but doesn’t want to assist with paying off its debts and meeting the costs of cutting its workforce, Tewolde GebreMariam, the airline’s chief executive officer, said in an interview last week.