Gulf carrier seeks to expand its African network with a potential investment in the region's largest regional airline.
Qatar Airways is on the verge of acquiring a stake in Airlink, South Africa's largest regional airline, in the latest move of its ambitious expansion across the African continent.
Sources familiar with the matter reveal that the two parties have engaged in extensive discussions about a potential investment from Qatar Airways, a state-owned entity. While a definitive agreement has yet to be reached, the investment would bolster Qatar Airways' presence in southern Africa, granting it access to passengers from regional cities and ultimately funnelling increased traffic through its Doha hub.
Qatar Airways CEO Badr Mohammed Al Meer recently confirmed to journalists that his airline was in the final stages of completing an investment in a southern African airline, without explicitly mentioning Airlink. He emphasized that southern Africa represented a crucial gap in the carrier's regional network, highlighting existing partnerships with Royal Air Maroc and a planned 49% investment in RwandAir.
"This airline in the southern part of Africa was important to us to create a network and cover every city in the continent," Al Meer explained.
One source close to the talks revealed that Airlink has been exploring "various opportunities" with the Qataris for some time, including a possible equity investment.
When contacted by the Financial Times, Airlink CEO Rodger Foster maintained that "Airlink is always exploring opportunities and is in conversations with several existing airline partners. However, we have not committed to any binding strategic equity investment."
Airlink operates a fleet of 66 aircraft, transporting over 3 million passengers annually to destinations spanning more than 15 sub-Saharan African countries, including South Africa, Botswana, and Tanzania, as well as the remote island of St Helena in the south Atlantic.
Established 32 years ago by Foster and Barrie Webb, the airline predates South Africa's first democratic election at the end of apartheid. Its shareholders include Foster and Webb, investment company Coronation Capital, and the Sishen Iron Ore Community Development Trust, holding 32.5% on behalf of 350,000 impoverished families from South Africa's Northern Cape.
The airline is profitable, and those involved in the negotiations highlight that any equity deal would be driven by strategic considerations rather than financial need.
A potential deal would "have to deliver significant benefits in terms of increased traffic, broader and deeper market reach, lower distribution costs and heft when negotiating with suppliers, lessors and insurers," one source stated.
Qatar Airways already operates flights to approximately 30 destinations across Africa, a region experiencing rapidly increasing demand for air travel as economies develop. US plane manufacturer Boeing estimates that intra-African passenger traffic will more than quadruple over the next 20 years.
"Airlink's scale as a regional airline is suitable for Qatar, and it is well-run, with a conservative management team which have kept it profitable for a long time," said Dr Joachim Vermooten, a transport economist at the University of Johannesburg.
Vermooten further highlighted that Airlink was one of the few South African airlines to emerge stronger from the Covid pandemic, gaining a larger share of the regional market following the placement of national carrier South African Airways into business rescue.
One potential obstacle to the deal lies in South Africa's air licensing regulations, which mandate that domestic airlines must be 75% controlled by South Africans, and cross-border airlines must be "substantially" owned by residents. However, Vermooten suggests that these local ownership requirements are gradually being relaxed globally to enable local airlines to secure the financial firepower necessary to "increase their capital base."