Future of SAA unclear as rescue funding does not materialise

17 September 2020 - 15:19 By Ernest Mabuza
The business rescue practitioners of SAA said the expected funding for the rescue plan has not been received from the government.
The business rescue practitioners of SAA said the expected funding for the rescue plan has not been received from the government.

The anticipated funding from the government to rescue SAA did not materialise as had been hoped on Thursday.

The joint business rescue practitioners for SAA were awaiting the funding for the restructuring of the airline and implementation of its business rescue plan. Thursday was the D-Day for the expected funding.

The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) plan to picket at SAA Airways Park in Kempton Park, Ekurhuleni, on Friday.

The business rescue plan, approved by the airline’s creditors in July, projected that at least R10.1bn was required.

“The [practitioners] hereby advise affected people that the anticipated funding has not been received by the company, in accordance with the commitment from government to provide the funding for the restructuring of the company and the implementation of its business rescue plan,” they said in a statement.

They said a meeting of creditors would be convened on Friday at 11am to engage those affected and the proposed future of the company.

The practitioners said at the meeting, they will provide an update on the status of the financial position of the airline and the prevailing circumstances.

In July, there was uncertainty about where the funding would come from.

Public enterprises minister Pravin Gordhan said at the time that the funding government had committed for the business rescue plan was still being worked on.

“This is money which is required over a period. What government has committed to is to mobilise funding,” Gordhan said at the time.

The department of public enterprises (DPE) said in a statement on Thursday afternoon that "efforts to locate funding sources continue" and called on creditors and employees to be patient.

It was aware of a creditors meeting called to discuss the future of the business rescue plan and of protests scheduled to be held outside the airline’s offices on Friday.

"The DPE remains sympathetic and deeply mindful of the plight of SAA employees," it said.

The department said it believed the key to solving the difficulties facing SAA was:

  • finalising and implementing the business rescue process;
  • starting a restructured airline;
  • appointing a new board and executive team; and
  • securing a credible strategic equity partner who could inject the needed technical, financial and operational expertise into the business.

The unions, in a statement on Thursday, demanded that the department and the National Treasury make funding available for the airline.

"Government is the shareholder of this airline and as such, it has a duty to ensure that the airline is viable and to protect jobs, as promised. The business rescue process was taken on by government voluntarily and Treasury gave its assurance that funding would be made available for the process," they said.

"It is a disgrace that we are at the end of this process and there is no money for voluntary severance packages and also no money to fund the business rescue plan, which means that SAA is in danger of liquidation."