SAA looks at terminating aircraft leases to fund rescue plan
Finalising the termination of aircraft leases and securing funding are the two outstanding issues that are critical to the implementation of the SAA business rescue plan, the rescue practitioners’ spokesperson Louise Brugman said on Thursday.
Brugman said on July 28 a notice to affected people was published, confirming the conditions of the adopted business rescue plan were fulfilled and that the plan was unconditional and enforceable.
“The importance of this action item is to ensure that the company does not have overly burdensome contracts that are not suitable for the company during the implementation of the plan or thereafter,” she said.
She said the company had entered into termination agreements in respect of 33 of the 40 aircraft leases.
“The termination of the remaining aircraft leases will hopefully be finalised at the end of September 2020, failing which the company will have to institute legal proceedings to cancel the onerous aircraft leases,” she said.
Brugman said there was short-, medium- and long-term funding required to implement the plan.
“The BRPs have been in engagements with the government regarding the procuring of this funding and to date government has advanced about R9.3bn for the repayment of the company’s various lenders as set out in the plan,” she said.
She said the remaining portion of the short-term funding required by the company had not yet been made available and the business rescue practitioners had engaged tirelessly with government to ensure that it was made available timeously.
“In the ongoing engagements on this issue, government has continued to express its commitment to making this funding available and has undertaken to do so during the course of next week,” she said.
She added that the practitioners would advise those affected on September 17 about progress on the funding.
“Should the [practitioners] not be satisfied that sufficient progress has been made for the timely advancing of the funding, a meeting of creditors will be convened on September 18 at 11am to engage with affected people on this issue and the proposed way forward, taking into account all relevant factors.”
Of the 5,000 SAA employees, more than 3,000 had applied for packages.
The business rescue plan, approved by the airline’s creditors in July, projects that at least R10.1bn is required.
The rescue plan foresees only 1,000 people remaining employed by SAA.
Department of public enterprises (DPE) spokesperson Sam Mkokeli said in a statement on Thursday that efforts to finalise the SAA business rescue process and restructuring of the airline were ongoing and a decision on the sources of funding would be announced soon.
Mkokeli said the DPE and National Treasury had worked hard to secure additional funding for SAA.
“The department remains confident that a solution will be found in time to avoid liquidation of SAA, as per the July 26 2020 cabinet statement. DPE, with the transaction advisor, Rand Merchant Bank (RMB), continues to assess the unsolicited expressions of interest for the new SAA from the private sector funders, equity investors and strategic partners,” said Mkokeli.
He said a number of engagements were held with the potential partners and their interest was encouraging.
“The DPE believes that the restructuring process, which is contained in the SAA business rescue plan is fundamental and will create a solid base for the emergence of a competitive, viable and sustainable national airline for the Republic of South Africa,” he said.