Amid concerns over the future of South African Airways (SAA), the Department of Public Works met with its practitioners this weekend to discuss turning the ailing airline’s financial misfortunes around.

The department said it will be holding talks with National Treasury to raise funds for SAA, which has already had to rely on the public purse to stay afloat.

The national carrier was placed under business rescue in December 2019 in an attempt to ensure its financial and operational sustainability.

Commitment to business rescue

In a statement issued on Sunday evening, the department reiterated its commitment to the process.

“The business rescue process allowed SAA to continue operating in an orderly and safe manner and to keep planes and passengers flying under the direction of a business rescue practitioner,” it said.

Job creation

The department further said it would like to create more jobs, which at times, have been at stake.

“We would like the airline to create jobs in tourism and related sectors of the economy and work with other African airlines to underpin and service the integration of African markets and dramatically improve intra-African trade and travel.”

“We are determined to contribute to the business rescue process so that we could minimise job losses and give birth to a rejuvenated SAA that all South Africans could be proud of. Collective effort is needed to make SAA a premier African airline and Star Alliance member,” the department added.

Business rescue practitioners, unions and SAA creditors

The practitioners tasked with assessing whether SAA has any chance of surviving its major cash crunch, Les Matuson and Siviwe Dongwana, met with creditors and unions in December to get their input on the business rescue plan which will be finalised in February.

“We…are of the belief that the business rescue process will achieve a better outcome for all stakeholders than an immediate liquidation,” the rescue practitioners said.

SAA lenders provided R2 billion as post-commencement finance (PCF) to enable SAA to continue to operate, while the government, via Treasury, committed an equal amount.

In addition to the cash injection from both parties, the process will also incorporate the following:

  • Preventing the disorderly collapse of the airline;
  • Provide an opportunity to critically review the cost structure of the airline, while also retaining as many jobs as possible; and
  • Providing a structured opportunity to re-organise the state aviation assets in a way in which they are better positioned to be sustainable and attractive to an investment partner.

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Presh JM Reporter

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