South African Airways Seeks New Investors After Failed Equity Deal

South African Airways seeks minority investors and loans to fund expansion plans after failed R3 billion deal, highlighting its cautious approach to growth without government subsidies.

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Mazhar Abbas
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South African Airways Seeks New Investors After Failed Equity Deal

South African Airways Seeks New Investors After Failed Equity Deal

South African Airways (SAA) is actively seeking minority investors and access to capital markets to fund its expansion plans in 2024, following the collapse of a R3 billion equity deal with the Takatso group. The failed deal has forced the airline to delay the launch of new routes to London, Frankfurt, and North America, according to SAA's interim chairman Derek Hanekom.

The South African government had initially planned to dispose of a 51% stake in SAA to the Takatso group, which would have resulted in a R3 billion cash injection for the airline. However, the deal was called off last month, leaving SAA to explore alternative financing options to support its growth strategy. "If we are able to get capital from other sources, we may be able to expand more rapidly," Hanekom stated.

Despite the setback, SAA is currently growing at a slow but sustainable rate without government subsidies. The airline plans to increase its fleet from 13 to 21 aircraft within the next financial year and has already added several new routes within Africa, as well as to Sao Paulo, Brazil, and Perth, Australia. SAA is set to relaunch on October 26, with plans to announce a direct flight from Johannesburg and Cape Town to São Paulo.

Why this matters: The success of South African Airways' expansion efforts and its ability to secure new investors will have significant implications for the country's aviation industry and economic growth. As a major African carrier, SAA's recovery and growth could boost tourism, trade, and job creation in the region.

Hanekom noted that SAA has reached a point of breaking even, and the Auditor General is expected to release the airline's financial results by the end of May. The search for permanent executives for SAA and some of its units is also underway. "We have revised our plans, we are growing slowly, very sustainably, and without any government subsidies at all," Hanekom emphasized, highlighting the airline's cautious approach to expansion in the wake of the failed equity deal.

Key Takeaways

  • SAA seeks minority investors and loans to fund expansion plans in 2024.
  • Failed R3 billion equity deal with Takatso group forces SAA to delay new routes.
  • SAA plans to grow fleet from 13 to 21 aircraft, add new routes within Africa and globally.
  • SAA's success in securing investors will impact SA's aviation industry and economic growth.
  • SAA aims to grow sustainably without government subsidies after reaching break-even point.