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.

Kenya Airways released a statement saying that it isn’t a merger and that it is a partnership which seeks to re-organise KQ, SAA assets in an ecosystem that will increase the South African aviation sector’s competitiveness.

SAA stated in separate statements that neither firm was prohibited from cooperating with other airlines and claimed that collaborating will help reduce costs.

After its financial woes and the COVID-19 pandemic, state-owned SAA resumed domestic flight operations last week. This week it launches an international service that will be smaller to five African capitals.

The state provided another bailout and it was able to exit administration in April. Now, the government is planning to sell 51% of the airline’s shares to a consortium in local.

COVID-19 has severely limited Kenya Airways’ passenger operations. To minimize losses, it has refocused its efforts on cargo.

Kenya plans to nationalize the airline. This month’s code-share agreement for Africa-Europe flights with Air France KLM expires.