Nico Bezuidenhout. Picture: FINANCIAL MAIL
SAA acting CEO Nico Bezuidenhout. Picture: FINANCIAL MAI

SOUTH African Airways (SAA) and Abu Dhabi’s Etihad Airways on Monday signed a code-share agreement that allows the two airlines to extend their networks and will provide future opportunities to procure and plan together.

The agreement provides 22 new connections for Etihad and SAA between the world’s two fastest-growing passenger markets, Africa and the Middle East.

In the first phase of the agreement SAA will place its code, SA, on 12 Etihad destinations flying out of Abu Dhabi.

In return Etihad will place its EY code on flights from Johannesburg to 10 SAA destinations and beyond, to countries such as Zambia and Zimbabwe.

SAA acting CEO Nico Bezuidenhout said for the airline to improve its financial position it needed to continually focus on managing costs and growing its revenue.

The agreement with Etihad had been pursued to grow SAA’s revenue, he said. Initial indications were that the agreement could add about R100m a year to revenue.

Etihad was a nonaligned airline, which meant it was not in an alliance such as Star Alliance or One World, and followed a strategy of growth through bilateral partnerships and equity investments in partner airlines, Etihad president and CEO James Hogan said.

Mr Hogan said Etihad already had 43 partnership agreements which supported its growth strategy.

"This strategy of working closely with partner airlines ... has been highly successful for Etihad Airways around the world," he said.

"We look forward to build upon the already strong relationship ... to extend our footprint in the strategically critical African market."

The airline, from its hub at Abu Dhabi International Airport, serves 88 destinations.

Mr Bezuidenhout said the agreement did not interfere with its existing agreement with Emirates that served the Johannesburg-Dubai route. There was also no conflict between the new agreement and its Star Alliance membership, he said.

The memorandum of understanding foresees an expansion of the relationship, which includes further end-destination points as well as opportunities to co-operate on procurement, using the scale of the combined 20-million passengers the two airlines will be move each year to extract better prices from suppliers.

The airlines said in a joint statement that they would also seek out opportunities to combine ground handling services and training needs.

Mr Bezuidenhout said partnership agreements that allowed SAA to extend its network without high capital commitments were one of the elements of the airline’s long-term turnaround strategy.

The turnaround plan developed by SAA is the ninth such plan proposed in the past six years, and was a condition imposed by the Treasury for the R5bn guarantee extended to the carrier last year to allow it to continue operating as a going concern.

SAA is raising R1.5bn in debt from two local banks to fund its operating costs against this guarantee.

Last month SAA signed a code-share agreement with India’s Jet Airways, extending its reach into the country beyond its current destination of Mumbai.