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SAA, Kenya Airways have long-term plan for pan-African airline group

FILE PHOTO: The coronavirus disease (COVID-19) outbreak in Nairobi

JOHANNESBURG (Reuters) - South African Airways (SAA) and Kenya Airways (KQ) have signed a cooperation agreement with a long-term view to create a pan-African airline group, the two companies said on Tuesday.

"It is not a merger but a partnership that seeks to re-organise KQ and SAA assets into an ecosystem that will make the South African and Kenyan aviation sector more competitive," Kenya Airways said in a statement.

SAA said in a separate statement that the pact did not preclude either firm from pursuing commercial cooperation with other carriers and said collaborating would help contain costs.

State-owned SAA restarted domestic flights last week and this week launches a scaled-down international service to five African capitals, after its longstanding financial woes were exacerbated by the COVID-19 pandemic.

It exited administration in April thanks to another state bailout, and the government has said it will sell a 51% stake in the airline to a local consortium.

Kenya Airways' passenger business has also been severely constrained by COVID-19, and it has focused on cargo to minimise losses.

Kenya has plans to renationalise the airline, whose code-share agreement with Air France-KLM for Africa-Europe routes ends this month.

(Reporting by Alexander Winning in Johannesburg and George Obulutsa in Nairobi; editing by David Evans)