For months now, South African Airways (SAA) has been on the brink of collapse as the government of South Africa fights to find a sustainable solution to keep its national airline operating. Now the airline is yet again facing the possibility of liquidation due to the government’s inability to provide funding to continue operations.
Meeting announced to decide next steps
At the beginning of this week, the airline said that it was hoping for an additional short term injection of cash to continue its business rescue proceedings. The carrier was placed under the control of ‘Business Rescue Practitioners’ (BRP), who were looking to the government for funding by Thursday, September 17th. The following ‘Notice to Affected Persons’ was posted on the BRP’s website (Matuson Associates) on September 17th:
“The BRPs hereby advise affected persons 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.”
The notice continues by saying that a meeting of creditors will be convened today – September 18th at 11:00 South African Standard Time to “engage with affected persons on this issue and the proposed future of the Company taking into account all relevant factors.”
Considering the time of this article’s publication, this meeting is to begin in two hours. Simple Flying will report on the outcome of this meeting as soon as details are made public by the BRPs.
According to Business Tech, the BRPs had previously said that the national airline requires R10.1 billion by September 17th. This is the equivalent to $620 million.
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Reaction from the South African government
South Africa’s Department of Public Enterprises (DPE) said it is aware of the creditor’s meeting that has been called to discuss the future of the airline. It also acknowledged the plan for protests to be held outside the airline’s offices on Friday. “The DPE remains sympathetic and deeply mindful of the plight of SAA employees,” Business Tech reports.
The department listed several critical steps needed to rescue the airline. They include:
- The finalization and implementation of the business rescue process;
- Following this, the restructured airline must resume operations with the appointment of a new board and executive team;
- And finally, securing a credible strategic equity partner able to introduce the required technical, financial, and operational expertise into the business.
“The department recognizes the interests of workers and creditors. We call upon employees and the creditors to be patient while we conclude the efforts to find a constructive outcome,” -Department of Public Enterprises, Government of South Africa via Business Tech
Do you think the South African government will be able to make a late delivery of this required funding? What do you think the outcomes will be of this upcoming meeting? Let us know your thoughts in the comments.