in Business & Finance

Government of Burundi plans merger of Air Burundi and SOBUGEA

Posted 7 August 2017 · Add Comment

The government of Burundi is planning to resuscitate moribund national carrier Air Burundi by merging it with fellow parastatal, the profitable ground-handling firm SOBUGEA (Société Burundaise de Gestion des Entrepôts et d'Assistance des Avions en Escale), reports ch-aviation.

The move has encountered intense resistance from SOBUGEA's labour unions who fear mass retrenchments, and even the firm's possible bankruptcy, should the merger proceed.

Air Burundi has been teetering on the brink of collapse since 2007 owing to a lack of serviceable aircraft. The carrier added a single MA-60 over four years ago but has yet to deploy it into revenue service.

As such, to rectify the situation, Burundi's vice-president brought together the Ministry of Transport, Public Works, and Machinery as well as the director general of Air Burundi to devise a way forward concerning the revitalisation of Air Burundi. A multisectoral commission was then established consisting of thirteen experts from across the country's economic divide.

According to the committee's note of June 14, the government is interested in merging the two entities. "The merger of the two companies would thus make it possible to generate significant savings resulting from the economies of scale given the similar activities and related investments they are involved in."

The first secretary of SOBUGEA's labour union, Hamissi Hakizimana, has said that before any merger can proceed, a full due diligence of either firm must be undertaken with its results submitted to shareholders for their final decision. He highlighted the fact that in the case of SOBUGEA, government is a 90% shareholder with the remaining 10% held by private entities such as local insurance firm SOCABU and even Belgian carrier Brussels Airlines. It, therefore, cannot act unilaterally without the consent of other shareholders, he said.

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