Qatar Airways targets Southern African airline investment

The CEO of Qatar Airways, Badr Mohammed Al Meer, said that the airline will soon announce an investment in a Southern African airline as part of its efforts to expand its network on the continent.

“We are at the final stage of an equity investment in an airline in the southern part of Africa,” Al Meer said during a talk in Doha.

Qatar Airways has ventured into the African market before. In 2019 the airline bought a 60% stake in a $1.3bn airport currently being built in Rwanda, and it has code-share agreements with African airlines including Rwandair, Air Botswana, and Airlink.

Al Meer’s announcement has sparked speculation about which airline he might be referring to, with many analysts speculating that Qatar Airways is interested in investing in South African Airways, which has faced serious financial difficulties in recent years.

The state-run airline, which was once a major player in the Africa market, was forced to cease operations entirely in September 2020 after years of corruption and mismanagement as well as pandemic-induced losses. The carrier returned in 2021, servicing a limited number of African destinations, and recommenced a handful of long-haul routes in late 2023.

Chidozie Uzoezie, aviation analyst and founder of the African Aviation Group, tells African Business that “although South African Airways has recently been going in and out of business rescue plans, it still manages to maintain a strong brand value. This is one of the key performance indicators that potential investors look out for.”

“South African Airways needs a serious investment partner to help reposition it in both the domestic and international markets,” he adds.

However, not all are convinced that Qatar Airways will follow through on its pledge to invest in an African carrier. Sean Mendis, an African aviation analyst, says that the airline “has a history of overpromising and underdelivering in the past.”

Indeed, Qatar Airways announced in early 2020 that it would be purchasing a 49% stake in Rwandair but, more than four years later, the deal has still not been finalised.

That said, Mendis believes a potential investment in a Southern African airline would make sense from Qatar’s perspective.

“During the Covid-19 pandemic, Qatar Airways took advantage of Qatar’s relative lack of restrictions on transit flights and so forth, and used this to grow into African markets while other airlines were unable to,” Mendis explains. “It now appears they are looking to take on equity stakes in airlines throughout Africa to build hubs within the region.”

However, while the business case for an equity investment in South African Airways appears strong in some respects, Mendis points out that South African licensing laws might complicate matters.some respectsHowever, while the business case for an equity investment in South African Airways appears strong in many ways, Mendis points out that South African licensing laws might complicate matters.

Any company applying to run an airline must be incorporated in South Africa and must have at least 75% of voting rights in it held by South African citizens who are ordinarily resident in the Republic.

“This means that Qatar Airways, or any foreign entity investing in any South African airline, would be restricted to having only 25% of the company voting rights,” Mendis says. “This investment could be an attractive proposition but it is not necessarily easy.”