SAA to be integrated with Mango, SA Express

[ERASER]

SAA to be integrated with Mango, SA Express
by Nicky Smith, 19 April 2013, 14:58


Public Enterprises Minister Malusi Gigaba. Picture: BUSINESS DAY
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THE Department of Public Enterprises is considering the "immediate integration" of all of the state’s aviation assets into a single company that will act as a holding company, according to a statement inadvertently released to the media on Friday.
The department has previously said it may consider the merging of South African Airways (SAA), SA Express and SAA’s low-cost subsidiary Mango as a way to cut costs from its loss-making airline businesses.
A rescue plan to turnaround the operations of SAA, which is surviving on a R5bn two-year guarantee from the Treasury, has been in the making since January and will be submitted by Minister of Public Enterprises Malusi Gigaba to Cabinet in about a month.
Documents
• PDF: Media announcement
• Document: Recalled media announcement containing the track changes
The plan, known as the Long Term Turnaround Strategy (LTTS), is meant to address the underlying problems within the airline which include replacing its inefficient long haul fleet, reworking its route network and establishing new alliances with airlines that are outside of its existing programme with Star Alliance to improve the reach of its operations without having to provide the feeder service.
The department inadvertently sent an incompletely edited copy of Mr Gigaba’s speech that was delivered on Friday to announce the appointment of Monwabisi Kalawe as the CEO designate of SAA. The e-mail was recalled.
The Microsoft Word document contained the track changes to Mr Gigaba’s speech on the right hand margin of the document.
At the end of the speech, in a box tagged as deleted is the following text: Red additional for your input and review.
"The most crucial element of the LTTS is that it requires the immediate integration of the airline group (SAA Group Holdings) where SAA, Mango and SA Express (SAX) operate as part of one holding company structure.
"The subsidiaries of the SAA Group Holdings will be consolidated and reported in the consolidated financial statements of the holding company. A new collective Group Vision and Mission will be instilled with subsidiaries strategies aligned to ‘SAA Group Holdings’ strategic objectives."
"A new network, alliance and fleet strategy will be implemented which will align SAA’s Business model to the global aviation market demand. These alignment measures together with other interventions included in the LTTS will transition SAA to improve performance and adapt to the changing global aviation market which will make it commercially sustainab (sic)," the note ends.
Mr Gigaba’s spokesman Mayihlome Tshwete said the planned integration was "nothing new".
"Remember we have always said we must better co-ordinate the operation of the state’s aviation assets. That hasn’t happened at the pace the minister would have liked, the minister has proposed more steps in that regard," Mr Tshwete said.
"The time will come to share more details of the turnaround strategy but we must still take that to the Cabinet," he said.
"It is not a secret that the minister has been driving for these assets to work more closely and efficiently and the turnaround strategy will make that more clear," Mr Tshwete said.

[GL]

Interesting but it does not actually refer to any possible savings from the rationalisation of the various duplicated functions such as Flight Ops. All it is trying to do is wrap up Mango and SAX profits(?) in one company to soften SAA's losses.

[nugpot]

Interesting but it does not actually refer to any possible savings from the rationalisation of the various duplicated functions such as Flight Ops. All it is trying to do is wrap up Mango and SAX profits(?) in one company to soften SAA's losses.

I agree. The only way to save money through complete integration would be to cut out all duplication between the companies. That would cost (in jobs) the complete support staff of Mango and SAX (probably 1000 jobs), because they simply would not be needed in one fully integrated airline. Even pilot jobs might be lost if the three airlines became one. Unfortunately the most junior pilots between the three airlines (last in first out) are the 30-odd cadets at SAX. They have not even completed training yet and losing pilots of colour in any type of merger would just be unthinkable.

Personally, I am hoping for a solution where we at SAX get access to SAA's rebate system. I don't particularly need their rebate allowance (although it would be nice, because it is so much better than ours), but their system is just so much more streamlined and you don't have to include 4 hours on the phone and switching between threats and bribes to get a rebate which actually follows your requested route or at least gets to your intended destination.

Getting an SAA parity salary would also be nice, but is extremely unlikely. I had hoped originally for the route for the younger SAX pilots to SAA to be easier, but that seems pretty unlikely as well.

I think very little will change for the employees at each airline. The changes will just be so that inefficiencies could be more effectively hidden.