S. African Airways, Express May Want Secondary Hub in Ghana

South African Airways, sub-Saharan Africa’s biggest airline by passengers, may establish hubs in East and West Africa as it seeks to expand its profitable African routes and compete with companies including Kenya Airways Ltd. (KNAL) and Ethiopian Airlines.

The state-owned South African company, which is based in Johannesburg, and its unit SA Express are seeking to expand in West Africa, Malusi Gigaba, the country’s public enterprises minister, said in an interview in Accra, Ghana’s capital, yesterday.

“We may want to establish a secondary hub for both South African Airways and SA Express in Ghana,” he said. “We want to establish two secondary hubs in East and West Africa.”

South African Airways was today given a 5 billion rand ($598 million) guarantee by the country’s Treasury five days after its chairwoman, Cheryl Carolus, and most of its board resigned in a dispute over strategy and the company’s finances. Gigaba has been pushing the company to focus on more profitable African routes to lessen dependence on routes to Europe where its faces strong competition.

The company may seek to partner a Ghanaian airline to service regional and domestic routes and to help the country reopen a national airline, Gigaba said.

“We bring a comparative advantage: We’re an African airline and we are state-owned and we could establish a maintenance repair and overhaul facility in Ghana to provide training for young Ghanaians,” he said. “A facility that could also provide such service to airlines from other parts of West Africa.”

External Growth

South African state-owned companies such as rail and port operator Transnet SOC Ltd. are also seeking to invest in Ghana, he said. Denel, a defense company, is also seeking opportunities, he said.

“The state-owned companies in South Africa seek growth opportunities outside the confines of the South African market,” Gigaba said. “We see Ghana as a strategic country to become our gateway into West Africa in particular in the fields of aviation and defense.”

Opportunities may include refurbishing the rail line to the port of Takoradi, he said.

“Ghana needs a lot of investment in terms of its infrastructure development because there it’s got a massive infrastructure lag,” Gigaba said.

To contact the reporter on this story: Pauline Bax in Accra at pbax@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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