SAA is exploring the sale of its valuable landing rights at major international airports, including London Heathrow, as it struggles to secure a strategic equity partner to sustain operations.
This development was discussed during a briefing to Parliament's Standing Committee on Public Accounts (Scopa) on Tuesday, October 22, where SAA's efforts to stabilise its financial standing were outlined, according to News24.
The move to potentially sell Heathrow landing slots comes after the collapse of the planned deal with the Takatso Consortium, which was intended to provide a capital injection to the airline.
The agreement, announced in 2021, aimed to halt a series of taxpayer-funded bailouts by selling a controlling stake to Takatso. However, after three years of negotiations, the deal fell through earlier this year, leaving SAA without the anticipated R3 billion capital boost.
Transport Minister Barbara Creecy informed the committee that while SAA is currently debt-free, the airline still requires fresh investment to sustain operations and expand.
She emphasised the need for a new equity partner, which could be a development finance institution or another airline willing to invest.
However, she admitted that no firm offers have materialised. "At the moment, we do not have any interest on the table," Creecy told MPs, underscoring the ongoing challenges the airline faces.
SAA Chairperson Derek Hanekom told MPs: “After the failed Takatso deal, we had to make considerable adjustments because the R3 billion injection was no longer coming in. In the long term, it would seriously assist to have some capital injection, which could be the way of another investor, but we do not depend on it. In the meantime, we are now engaging for a small loan facility for some kind of buffer, as our cash reserves are low and vulnerable to shock.”
He added: "There is a much more positive approach from the banks because we have stabilised. The banks are looking at our business plans and our unencumbered properties, worth R5 billion, for the loan."
Historically, slots at Heathrow have been extremely valuable, with a 2016 sale of slots to Oman Air fetching US$75 million (R1,3bn).
However, recent regulatory changes by the Civil Aviation Authority have pushed for reduced landing charges at Heathrow, potentially affecting slot values.
This would not be the first time SAA has sold Heathrow slots. In 2012, the airline offloaded one of its prime slots as part of a previous effort to raise funds.
Currently, SAA leases its Heathrow slots to other airlines, including Qatar Airways. Despite this, the option to sell remains on the table as the airline seeks ways to improve its financial situation.
Joachim Vermooten, an aviation economist and chartered accountant, told Travel News that if SAA does not have any immediate plans to operate to Heathrow, it would be a good idea to sell the landing rights.
“SAA would ultimately have to decide whether it plans to operate to Heathrow again. Otherwise it could look at other airports surrounding London, possible Gatwick,” Vermooten said.
During the briefing, Creecy also provided updates on SAA's financial reporting. The airline has faced challenges in submitting its legacy financial reports on time, but Creecy assured that the reports for the 2022/23 fiscal year are complete, and the 2023/24 reports are expected by February.
Despite the setbacks, SAA is pushing forward with plans to expand its fleet and resume international routes. It currently operates 16 aircraft, with a target to increase this to 21 by next year.
Regardless of its financial situation, Hanekom expressed optimism about the future. "We believe in the potential of the airline. There is no doubt we are on a growth path."
