Qatar Airways is in advanced discussions to acquire a stake in Airlink, the largest regional airline in South Africa. This move aligns with Qatar Airways’ strategic expansion plans across the African continent.

While detailed negotiations have taken place regarding an investment from Qatar Airways, which is fully owned by the Qatari government, a definitive agreement has not yet been reached.

The proposed investment would fortify Qatar Airways’ network in the southern African region. This strategic move would grant the airline access to a broader passenger base from regional cities, ultimately channeling increased traffic through its central hub in Doha.

During a recent press conference, Qatar Airways Chief Executive Officer Badr Mohammed Al Meer disclosed that the airline is in the final stages of finalizing an investment in a southern African airline, refraining from explicitly naming Airlink.

Southern Africa was identified as the “missing component” in the carrier’s regional network, following a partnership with Royal Air Maroc and planned investment in 49% of central Africa’s RwandAir.

“This airline in the southern part of Africa was important to us to create a network and cover every city in the continent,” he said. 

An individual privy to the discussions disclosed that Airlink has been engaged in ongoing conversations with Qatari representatives regarding a range of potential opportunities, including the possibility of an equity investment.

Upon being contacted by the Financial Times, Airlink’s CEO Rodger Foster stated that: “Airlink is consistently exploring potential opportunities and is engaged in discussions with several existing airline partners. However, we have not committed to any binding strategic equity investment.” 

The airline, which operates a fleet of 66 aircraft, transports over 3 million passengers annually to destinations across 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.

The company was founded 32 years ago by Foster and Barrie Webb, two years prior to South Africa’s first democratic election, marking the end of apartheid.

Shareholders include Foster and Webb, investment firm Coronation Capital, and the Sishen Iron Ore Community Development Trust, which holds 32.5 percent on behalf of 350,000 impoverished families from South Africa’s Northern Cape.

The airline is profitable, and those close to the negotiations said its motivation for any equity deal would be strategic, rather than financial.

A 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 person said.

Qatar Airways currently operates flights to approximately 30 destinations across the African continent. This region is anticipated to experience substantial growth in air travel demand as its economies continue to develop. According to Boeing, the leading US aircraft manufacturer, intra-African passenger traffic is projected to increase more than fourfold over the next two decades.

“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.

Airlink, one of the few South African airlines, emerged from the Covid pandemic in a stronger position. This allowed Airlink to capture a larger share of the regional market after the national carrier, South African Airways, entered business rescue.

The primary obstacle In reaching an agreement lies in South Africa’s air licensing regulations. These regulations mandate that domestic airlines must be under the control of South African citizens by at least 75%, while cross-border airlines must have a "substantial" portion of their ownership held by residents. However, Vermooten highlighted a gradual global relaxation of these local ownership requirements. This shift aims to provide local airlines with the necessary financial resources to “expand their capital base.”