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It appears that the Department of Public Enterprises is putting its last hope of saving South African Airways (SAA) in that lenders are willing to pay the bill and provide R10.5 billion, or a portion thereof, to begin implementing the business rescue plan and restructuring. The airline.
In a statement on Friday, the DPE said SAA will not be liquidated and that the restructuring process will be “closer to completion in the coming weeks.” It says lending institutions will be “asked” to finance the restructuring process and pay for voluntary severance packages for employees. It does not stipulate whether private or public credit institutions will be contacted or whether it could simply be a request for a type of short-term financing.
The DPE statement says the government will “shift funding priorities” to restructure the SAA and that the department continues to evaluate 20 unsolicited expressions of interest from private sector funders, private equity investors and partners for a future SAA. restructured. This is in line with what the DPE has been saying for months. However, nothing concrete has come to the fore.
The DPE said an announcement to this effect would be made on the Adjustment Appropriation Bill, which will be presented soon in Parliament.
Earlier on Friday, SAA’s business rescue professionals decided to give the government one more week to obtain the necessary funds to implement the rescue plan and restructure the airline.
This came after the government reconfirmed to practitioners on Friday morning that the Treasury supported the commitment to obtain R10.5 billion for SAA within deadlines that have yet to be finalized. Rescue professionals would therefore still have to engage with the government to find out what timelines are proposed and how funds will flow to SAA.
Business rescue practitioners said during a creditors meeting on Friday morning that they were ready to propose to creditors that the state airline be liquidated under the Companies Act.
Creditors were informed that to date no financing had been received from the government for the implementation of the rescue plan and the restructuring of the airline, already adopted a few months ago. Last week, the government indicated that it would pay the money before September 16, but this did not happen.
Existing funds have now been depleted, as have all the ways that rescue practitioners have tried to prolong the rescue process.
Professionals indicated during the meeting that, should the only two options that end up effectively becoming a dissolution or a liquidation, they would need time to do the necessary analysis to determine which of the two options will be better for the affected parties. even in terms of risks.
Creditors were told that numerous interactions between rescue professionals and the government have made it clear that the government remains committed to providing the funds to implement the plan and restructure the airline and is seeking various mechanisms to provide such funds.
No date was given for what “next week” meant, and the practitioners promised to inform the creditors once they had more clarity.
“We hope this is not a more empty promise,” says Phakamile Hlubi-Majola, spokesperson for the National Union of Metalworkers of South Africa (NUMSA).
NUMSA and the South African Cabin Crew Association (SACCA) had sent an official notice to the office of the Presidency, the DPE, the National Treasury and the office of the President of the National Assembly indicating their intention to legally challenge any SAA liquidation and SA Express (SAX).
Hlubi-Majola says this legal challenge still persists and is putting pressure on the government to commit to finding the money to save SAA.
“We can’t celebrate until we actually see the money. We have heard a lot of promises and many times they didn’t deliver on their promises,” he said.
On Friday, SACCA and NUMSA members picketed the SAA offices in Johannesburg and Cape Town to show their disappointment and anger at both the DPE and the National Treasury. A memorandum was delivered to a representative of the DPE during the protest action.
* This article was updated with comments from NUMSA.
