South African Airways (SAA) is thinking about selling its landing slots at major international airports as a quick solution for generating at least R1 billion in funding.
According to Transport Minister Barbara Creecy, the state-owned airline is no longer in dire financial straits and will not be requesting any additional money from the government.
However, SAA still has a significant funding gap due to the failed Takatso deal that was supposed to take effect earlier this year.
The private investment company Takatso Consortium had previously offered to buy a controlling stake in the airline of 51% while the South African government would retain the remaining 49%, but the deal was mired in controversy and was ultimately dropped in March this year.
Takatso was supposed to invest R3 billion in SAA following the takeover, but the airline is strapped for cash now that the deal has fallen through.
Looking for a quick fix
Speaking to Parliament’s Standing Committee on Public Accounts, Creecy explained that the government is still open to the idea of securing an equity partner for SAA’s funding, which would allow it to open up new regional and international routes.
However, attracting investors is likely to be a difficult task for the airline, which still has a poor image and a history of corruption dating back to the years of State Capture, SAA interim board chair Derek Hanekom told Daily Maverick.
Minister Creecy stated that SAA requires a significant capital injection to return to its former glory, but that it has not seen any interest from financial groups at this time.
The R3-billion investment from Takatso would have been a major windfall for the air carrier, which has been re-establishing itself within the aviation sector since it emerged from business rescue in 2021.
The deal’s collapse means that SAA has had to postpone its expansion plans and adjust its corporate strategy, explained Hanekom.
Without an obvious source of investment in site, South African Airways is now contemplating the sale of one of its two landing slots at London’s Heathrow Airport in the United Kingdom – one of the busiest airports in the world.
SAA does not currently have any flights to and from the UK, and these slots are currently leased to British Airways (BA) and Qatar Airways.
The lease with Qatar expires in March 2025, which would allow SAA to sell the slot while keeping the one it still has with BA, according to BusinessTech.
“Even when we were flying, when we had many routes and many flights to London, we were only using one of these landing slots. The possible disposal of one of the landing slots would obviously be a useful capital injection in the enterprise,” said Hanekom.
Slots at high-traffic airports are incredibly sought-after by competing airlines, which is why the sale of one can generate figures upwards of 10 digits.
The valuation of SAA’s Heathrow asset has yet to be determined, but other air carriers have shown interest in buying the slot, Hanekom told Daily Maverick.
However, the proposal has been criticized as a quick-fix solution that will hurt SAA’s interests in the long run.
Aviation analyst and editor of SA Flyer Guy Leitch, recently spoke on Cape Talk, saying that selling these slots is akin to ‘selling off the family silver,’ and that the airline is already short of long-haul flight options, many of which have been snapped up by competitors.
Leitch also warned that airports slots aren’t worth as much as they were pre-Covid, meaning the sale may not generate the funds that SAA is hoping for.
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