SAA Seeks New Cash To Fund Expansion

South African Airways (SAA) may consider selling one of its slot pairs at London Heathrow Airport as it seeks to raise funds and continue its slow recovery, the airline’s interim chairman says.

Perennial loss-making SAA emerged from business rescue, the South African equivalent of Chapter 11, in September 2021 as “a seriously weakened airline,” Derek Hanekom told members of the South African parliament’s public accounts committee.

Protracted negotiations to have a local consortium take a 51% stake in SAA collapsed earlier this year. If it had proceeded, the move would have seen the consortium inject ZAR3 billion ($170 million) into the national carrier, Hanekom said.

He told parliamentarians there was now no question of privatization, “but there’s a common understanding there will need to be some kind of investment.” Hanekom noted the recent move by Qatar Airways to take a 25% shareholding in South African regional carrier Airlink, a development he said had benefitted the local airline.

The question of whether to bring in an equity partner to SAA lies with the South African government, “but if we’re going to expand the way honorable members would like us to expand, we will need a cash injection,” Hanekom said. “The question is where the cash injection will come from.”

He said SAA was rebuilding slowly and there was “real potential value in having a national carrier.” The interim chairman noted that the first two intercontinental routes reintroduced by SAA—to Perth, Australia, and Sao Paulo—had seen major increases in tourism to South Africa.

SAA has two pairs of slots at London Heathrow, one leased to British Airways, the other to Qatar Airways. SAA intends to talk to the South African government about monetizing at least one of the pairs. This could bring a “useful capital injection” that could be used to further the gradual expansion of the SAA fleet, which stands at 16 aircraft, with the company in the process of leasing five more in 2025.