Ethiopian Airlines Considers Purchasing Stake In Struggling South African Airways

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Written by Peter Pedroncelli
Ethiopian Airlines
Ethiopian Airlines Group would be open to purchasing equity in struggling South African Airways, which has not made a profit since 2011. Tewolde Gebremariam, Chief Executive Officer of Ethiopian Airlines, poses for a photograph after speaking to The Associated Press at Bole International Airport in Addis Ababa, Ethiopia Saturday, March 23, 2019. (AP PhotoMulugeta Ayene)

Africa’s biggest airline, Ethiopian Airlines Group plans to invest in other African airlines and is considering buying a stake in struggling South African Airways.

South African Airways is often hyped as Africa’s best airline with highly publicized international awards but it has struggled with financial losses and has not made a profit since 2011.

SAA is $611 million in debt and has relied heavily on government support to keep operating.

The state-owned Ethiopian Airlines has doubled its number of passengers and increased its profit fivefold in the last six years, BusinessInsider reports.

A record 12.1 million passengers flew with Ethiopian Airlines during the first six months of 2019.

It is now looking to invest in other airlines around Africa, including new carriers planned for Ghana and Zambia. A stake in South Africa’s state-owned airline may also be on the table.

Tewolde GebreMariam, the CEO of Ethiopian Airlines, has expressed an interest in the struggling South African carrier. 

“We are interested in supporting South African Airways,” GebreMariam said in an interview. “We would consider it,” he said, according to Businesstech.

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The two airlines are already partners in the Star Alliance, the world’s largest global airline alliance based in Germany.

South Africa’s financially unstable state-owned enterprises are weighing on the economy. Finance minister Tito Mboweni had to allocate additional funds to debt-ridden companies including power utility Eskom and South African Airways.

South African President Cyril Ramaphosa said that his government is in talks with potential investors who are interested in South African Airways.

“South African Airways is one of those state-owned enterprises that has relied on lots of state bailouts,” Ramaphosa said at the Financial Times Africa Summit in London, according to Reuters.

“We are on record as saying we are open to the participation of the private sector. As we speak now, we’re talking to a few interested parties when it comes to SAA,” he added.