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South African Airways Business Rescue Practitioners (BRP) say they have made the decision to suspend all airline operations with immediate effect, while awaiting the outcome of the group’s funding problems.
Administrators said on Tuesday (September 29) that while progress has been made in securing funding for the group’s rescue plan, until the issue is resolved, the group must seek other options.
“There has been some progress during the past week in raising funds for the implementation of the Business Rescue Plan, subject to certain terms and conditions,” said the BRPs.
They noted that some donors have indicated their willingness to provide a portion of the funds necessary for the implementation of the Business Rescue Plan and are collaborating with the government in relation to obtaining the remaining funds that are required to fully implement the plan.
The implications for the company if it only receives a portion of the necessary funds are also being discussed.
The BRPs indicated that they needed time to evaluate and determine the appropriate way to proceed in the absence of financing, and to do so, they are considering the sale of the business and / or company assets and their liquidation.
“We can make that determination and finalize those details in the following week,” they said.
In the meantime, however, the BRPs have made the decision to suspend all of the airline’s operations with immediate effect, and are following a process to put the airline under care and maintenance until financing discussions are completed.
“We will continue to keep affected individuals fully informed about the progress of these matters and how this will affect business rescue procedures,” the BRPs said.
Government funding
Bloomberg reports that the National Treasury wants stringent conditions attached to the guarantees it provides for loans to the country’s struggling state airline, according to two people familiar with the matter.
Officials from the Treasury and the Department of Public Companies met on Saturday to discuss ways to restart South African Airways, said the people, who asked not to be identified because the talks are private. Representatives from two South African banks attended the talks, they said.
SAA halted operations and sought bankruptcy protection in December. The airline’s administrators say R10.5 billion is needed for the airline to resume operations.
Finance Minister Tito Mboweni is willing to provide guarantees of 4 to 5 billion rand of that amount, subject to strict criteria, the people said.
It’s unclear where the funding would come from and there is no agreement on any bailouts yet, the people said. President Cyril Ramaphosa has backed the rescue of the airline, they said.
Read: Treasury SAA ‘loan’ comes with strict conditions
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