SAA sets its sights on Air Tanzania after pulling out of bid for Uganda

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Michael Wakabi/KAMPALA

South African Airways (SAA) has trained its sights on Air Tanzania after dropping a bid for a stake in Uganda Airlines. The move revives a takeover plan submitted in secret to the Tanzanian authorities last November, and recently disclosed by Tanzanian sources.

Shareholders in Uganda-based long-haul carrier SA Alliance Air, SAA's main vehicle for targeting the East African market, have meanwhile met to review plans to launch regional operations, although the strategy poses a clear threat to incumbent carriers. Cash-strapped Alliance has also been granted $126,000 by Kampala to keep it flying until the end of this month.

SAA's planned partnership with Air Tanzania would involve a rebranding, combined sales and marketing and a route network restructure. SAA also aims to take over Air Tanzania's fleet planning, revenue management and ticketing, financial management and maintenance.

Aiming to avoid a repeat of its experience with Uganda Airlines, where it encountered a hostile legislature, SAA had planned a seminar with Tanzanian legislators on 8 April. The event was blocked by an opposition angry at Air Tanzania's exclusion from the event, but not before details of SAA's plan had been revealed.

The Ugandan Government's funding of Alliance will help pay off a $420,000-a-month operating deficit, with SAA having offered to fund 40% of the sum (equal to its shareholding), but requiring 60% shareholders Uganda and Tanzania to provide the balance.

A meeting in Dar es Salaam last week edged towards a new business plan for Alliance, although Tanzania is reluctant to hand over regional routes.

Further problems are posed by South Africa's non-membership of African trading group Comesa, meaning that with SAA as its largest shareholder, Alliance would not be party to the open skies pact.

Ugandan transport minister Michael Werikhe says there are "more than 50" areas of conflict with SAA over Alliance, and if a deal cannot be agreed by 30 April, "anything is possible, including winding up the business".

Meanwhile, a liquidator has been appointed for Uganda Airlines after the collapse of SAA's bid for the carrier.