Public enterprises welcomes Treasury's letter of support for SAA
The department of public enterprises said on Thursday it welcomed the commitment by the National Treasury that the government will support and source funding for a business rescue plan for SAA.
In terms of the plan published by the business rescue practitioners (BRPs) for SAA, the government, as the sole shareholder of the airline, is required to provide a letter of support for funding the plan which will result in a viable and sustainable national flag carrier that provides international, regional and domestic services.
On Tuesday, SAA’s creditors gave the stricken state-owned airline’s revised business rescue plan the green light, with 86% of them voting in favour of it.
“A letter of support that commits the government 'to mobilise funding for the short, medium and long term requirements to create a viable and sustainable national airline' was signed by the ministers of finance and public enterprises on July 15 2020 and provided to the BRPs,” public enterprises department spokesperson Sam Mkokeli said.
In the rescue plan, it is projected that R10.1bn will be required to fund and execute the process.
This includes stabilising the balance sheet of SAA, restructuring the rest of the group entities that are not in business rescue and providing working capital for the rest of the group’s entities.
Mkokeli said the funding commitment gave effect to the cabinet’s endorsement of a business rescue plan for SAA.
The department said the cabinet’s position was that it supported the proposal for a new airline and the concerted effort to mobilise funding from various sources, including from potential equity partners, for the uptake of the new airline.
Different tranches of money will be required as different aspects of the restructuring takes effect.
This will include severance packages for about 2,700 SAA employees who will be retrenched.