The government gave a broad assurance on Friday to the creditors of South African Airways that it would provide the funding urgently needed to keep the stricken carrier going.
In a statement after a meeting of the airline’s creditors, the Department of Public Enterprises (DPE) said funding for SAA would be announced in the medium-term budget policy statement next month.
The DPE confirms that government will reprioritise funds to finalise the restructuring of South African Airways (SAA) and the implementation of the airline’s business rescue plan.
“An announcement to this effect will be announced in the Adjustments Appropriation Bill, which will be introduced in Parliament soon,” the department said. ’’The national carrier will not be liquidated.”
It suggested that in the interim, bridging finance would be sought for the airline.
“Because the restructuring process should be brought closer to finalisation in the next few weeks, lending institutions will be requested to finance the restructuring process and honour commitments for voluntary severance packages and retrenchments.”
This came as creditors held a meeting on Friday called by the airline’s business rescue practitioners, Les Matuson and Siviwe Dongwana, after receiving no instalment on R10.3 billion agreed to in terms of the business rescue plan.
Dongwana told creditors it was important to the team that funding be received before it could discharge its responsibilities.
He said it had received assurances from the government that it remains committed to funding the business rescue plan but added: “It is important to note that as of today, we have yet to receive the funding from government.”
He added that last week the business rescuers received a letter from the government indicating that funding would be available on Wednesday.
“Unfortunately, the funding has not yet flown into the company,” he said.
The business rescue team last week described the airline’s financial situation as “dire”.
On Friday, SAA staff picketed outside the airline’s offices in Kempton Park in protest at the shareholders’ failure thus far to fund the rescue plan.
A source said the government has indicated that if need be, it would provide the money itself.
This is a departure from Finance Minister Tito Mboweni’s statement in court papers several months ago that the government had not committed to giving the funds but rather to mobilising to secure them.
Mboweni said potential sources included strategic equity partners. However, although Public Enterprises Minister Pravin Gordhan has said potential partners had expressed interest in the venture, so far nothing has been announced in this regard.
About R2.2 billion of the agreed sum was needed to pay out the voluntary severance packages of 3 000 staff.
It is expected that another meeting of interested parties will be held next week to provide clarity on the government’s commitments.
SAA went into business rescue in December last year after losing more than R10 billion in two financial years. The company last turned a profit in 2011.
The DPE said on Friday it would “continue to assess the 20 unsolicited expressions of interests from private-sector funders, private equity investors and partners for a future restructured SAA”.
It added that it would continue to work with other government departments, “including National Treasury”, to ensure the restructuring process was successfully implemented.
“The DPE believes the key to solving the difficulties facing SAA is the finalisation and implementation of the business rescue process, followed by the start of a restructured airline, appointment of new non-executive directors and leadership team and securing a credible strategic equity partner who can introduce the required technical, financial and operational expertise into the business.
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