South African Airways (SA, Johannesburg O.R. Tambo) is seeking minority investors and access to capital markets and loan financing in the wake of the collapse of its equity deal with the Takatso consortium, according to the flag carrier's interim chairman, Derek Hanekom.

Speaking to local broadcaster eNCA (eNews Channel Africa), he said the airline had to adapt its business plan due to financial constraints. Intercontinental route expansion plans beyond Perth International have been delayed pending the acquisition of capital.

"We were planning to go beyond Perth as our second intercontinental flight [after São Paulo Guarulhos]. We were planning to do London, Frankfurt, and North America. All of that has to be delayed. So we're not going to go beyond Perth for the next couple of years unless some sources of capital can be found," he explained.

Despite the search for minority investors, Hanekom emphasised that the state intends to retain majority ownership, saying that the government "made it very clear that whatever share, whatever investor may come on board, it would not be on the same terms as the Takatso deal; in other words, it will be a less-than-50% shareholding, a minority shareholding." After three years of negotiations, the South African government and Takatso cancelled an agreement in March to sell off 51% of SAA.

Hanekom said SAA was also exploring capital markets and loan financing options: "We have to look for loan finance. If we are able to get capital from whatever source, then we might be able to expand more rapidly."

SAA recently tabled four years of annual financial statements, covering the years 2019 to 2022. They show a mixed picture, with significant losses during the business rescue period but signs of improvement in the most recent financial year. Interim CEO John Lamola has stated that the airline is now running on financial resources generated from its own operations, indicating a shift towards self-sufficiency. He said there would be a "solid plan" by mid-2025 for new investors, possibly including other airlines.

However, a damning Auditor General report earlier this year will have raised eyebrows among potential investors. It flagged serious concerns regarding South African Airways Group's non-compliance in managing procurements, contracts, expenditures, and revenue, highlighting material errors in the financial statements.

Hanekom underlined that SAA could not rely on state aid again and must finance its own expansion. "So at this stage, we're looking at realistic, sustainable, modest growth, which is not going to rely on you and all of the viewers and their pockets to fund SAA's expansion. It has to finance its own expansion. And therefore it has to be very realistic. And has to be very carefully calculated, so each new route will be very, very carefully examined. You can fly to many places in the world, but if it's costing the taxpayer an arm and a leg then it might not be the right thing to do."

The Auditor General's report revealed that the government had injected ZAR38.1 billion rands (USD2 billion) into SAA since April 1, 2018, of which ZAR27.6 billion (USD1.44 billion) was deposited after the airline exited 17 months in business rescue on April 30, 2021. The business rescue plan had initially foreseen an injection of ZAR10.5 billion (USD549,000).

Despite SAA's challenges, Hanekom said early bookings for the airline's Johannesburg O.R. Tambo-Perth flights relaunching on April 28 showed promise. The airline resumed its first intercontinental route to São Paulo in October last year.