South African Airways Seeks New Investment and Financing Options After Takatso Deal Falls Through

South African Airways (SAA) is actively pursuing minority investors and exploring various financing avenues to secure capital, following the collapse of its equity partnership with the Takatso consortium. Derek Hanekom, the interim chairman of the flag carrier, discussed these strategic moves in a recent interview with eNCA (eNews Channel Africa), highlighting the need to adjust SAA’s business plan due to ongoing financial challenges.

The search for fresh capital comes at a critical time as SAA aims to expand its intercontinental routes, which currently stop short at Perth International. Plans to extend services to London, Frankfurt, and North America are on hold, pending the acquisition of necessary funds. “We were planning to go beyond Perth as our second intercontinental flight [after São Paulo Guarulhos]. All of that has to be delayed… unless some sources of capital can be found,” Hanekom explained.

Despite seeking new investment, the South African government remains adamant about maintaining majority ownership of the airline, aiming for deals that offer less than a 50% shareholding to potential partners, contrasting the previously intended majority stake sale to Takatso.

Hanekom also noted that SAA is exploring opportunities in capital markets and securing loan financing to bolster its financial position. This approach aligns with the airline’s broader strategy to achieve sustainability and reduce reliance on state aid, a commitment underscored by its recent move towards self-sufficiency, as stated by interim CEO John Lamola.

SAA’s financial health, as revealed in its latest annual financial statements covering 2019 to 2022, shows signs of stabilization, particularly in the most recent year. However, a report from the Auditor General earlier this year raised concerns about compliance issues related to procurement and financial management, which could deter potential investors.

Despite these challenges, Hanekom remains optimistic about SAA’s future, emphasizing a growth strategy that does not burden taxpayers. He stressed the importance of carefully assessing new routes to ensure they are economically viable without additional state funding.

The airline’s plans for expansion and securing new capital are set to be further detailed by mid-2025, potentially involving partnerships with other airlines. Meanwhile, the relaunch of SAA’s Johannesburg to Perth flights and its resumed service to São Paulo indicate some positive momentum, with early bookings showing promising signs.

As SAA navigates through these restructuring efforts, the focus remains on securing a stable financial future, enhancing operational efficiencies, and expanding its global footprint in a sustainable manner.