Mozambique and Zambia have both expressed an interest in joining the multinational African carrier Alliance Air, as it emerges that two of its founder members are preparing to merge their operations.
Talks with Mozambique's national carrier LAM have been 'ongoing for more than a year and they are likely to join the fold,' says Alliance's company secretary, Fred Obbo.
Zambia's two privately owned carriers, Aero Zambia and Zambia Express, which emerged from the collapse of Zambia Airways, are also interested. Neither carrier has international operations, which should make Alliance attractive to them, says Obbo.
The prospect of Alliance attracting more partners emerged in mid-March, after the Ugandan and Tanzanian transport and communications ministries revealed they had reached a tentative agreement to merge Air Tanzania and Uganda Airlines into Alliance by the end of the year. South African Airways currently owns 40 per cent of Alliance with Uganda and Tanzania sharing the balance, a split which could change, says Obbo.
The merger with Alliance would supersede existing privatisation plans. The two carriers would cease operations and their routes would be flown under the Alliance name.
Consultants were due to be appointed by the end of March to evaluate the viability of the concept and make recommendations by the end of June. However, a senior executive of another African airline says a merger is being 'vigorously resisted' by both Air Tanzania and Uganda Airlines.
Obbo does not rule out new livery or the acquisition of new aircraft and adds that more money would have to be pumped into the new venture.
Alliance currently operates one Boeing 747SP leased from SAA which also provides the cockpit crews and maintenance. Although the airline has yet to break even in its second year of operations, load factors are within the 65 to 80 per cent range, says Obbo. He expects Alliance to break even in its third year.
The carrier will add Dubai and Bombay to its existing network between Entebbe, Dar-es-Salaam, Johannesburg and London, by the last quarter of this year. Previously, both Uganda and Tanzania had blocked these destinations because their flag carriers served these routes. 'This will now be resolved as these two carriers will no longer exist by then,' says Obbo.
There will also be layoffs, says Obbo. The three carriers have over 1,000 personnel between them, with 750 at Air Tanzania, 300 at Uganda Airlines and 100 with Alliance.
The chief executive of the Airlines Association of Southern Africa, John Morrison, supports the idea of expanding Alliance to include the carriers from Mozambique and Zambia. 'Alliance is exactly what Africa needs and it is gaining dominance in Central Africa. The two Zambian carriers would cede the traffic rights they have been awarded to Alliance. If Zambia wants an overseas service, I am sure the government would agree to that.'
It would also make sense for cash-strapped LAM to throw in its lot with Alliance, says Morrison. In March, the Mozambican government announced that it would sell 51 per cent of LAM for US$22 million. Between 20 and 30 per cent would be offered to a foreign buyer, who would have to find partners among local consortia to take up the balance. LAM is heavily in debt. It owes $52.4 million to Boeing and a further $2.5 million to financial institutions.
Source: Airline Business
