South African Airways Looks To Expand Into West Africa

South African Airways (SAA) is planning to enter West African airline business through a stake acquisition in a Togo-based carrier and setting up its regional operation base in Ghana.  The South African airline is seeking to turn around its loss making streak that has seen it seek bailouts from state coffers.  It is currently awaiting a multibillion-rand capital injection from the South African Treasury and has been surviving by borrowing against a R5 billion ($500 million)  government guarantee.

BDlive reported that a team of top officials from SAA plan to visit Ghana in early July to assesses the viability of setting up a regional hub there. This, the airline’s chief executive  Monwabisi Kalawe said, was one of the key to SAA’s turnaround strategy.  One of the options under consideration by SAA is to partner with Ghanaian investors in acquiring part of Asky, which operates out of the Togolese capital, Lomé, at an undisclosed sum and relocate it to Accra.

Asky began commercial operations in 2010, having been formed at the instigation of West African states following the collapse of pan-African airline Air Afrique.  A major stumbling block for the acquisition however is the presence of Ethiopian Airways, one of SAA’s main rivals in African skies, among other private investors in Asky.  The Ethiopian national carrier is the fastest-growing African airline.

Kalawe said he expected SAA to break even by 2018/19, which would be followed by a period of sustainable profitability.  The Chief Executive came under heavy criticism recently after he was accused of personally trying to buy shares in troubled Senegal Airlines on a proposal from the West African nation that SAA acquire a stake early this year.

BDlive reported Kalawe saying that SAA had shelved plans to create flight hubs in both East Africa because the region was already saturates, mainly through the operations of Ethiopian Airline and Kenya Airways.  If all goes according to plan, West Africa will eventually account for a tenth of SAA’s operations, compared to 2 percent currently.

Copyright AFK Insider 2014