South African Airways creditors approve rescue plan
South African Airways (SAA) creditors approved a rescue plan for the struggling airline on Tuesday that requires at least 10 billion rand ($596 million) in new funding, throwing the ball into the government’s court to come up with the cash.
State-owned SAA, which last made a profit in 2011, entered bankruptcy protection in December and suspended commercial passenger flights in March when the government imposed one of the world’s strictest lockdowns to contain the new coronavirus.
Fierce wrangling between the airline’s administrators, the government and trade unions has complicated rescue efforts, which delayed the publication of a restructuring plan until last month.
That plan envisages scaling back the airline’s fleet and shedding jobs before gradually ramping up operations as the disruption caused by COVID-19 eases. Administrator Siviwe Dongwana told a creditor meeting the plan had been approved by 86% of voting interests.
“It is an important step forward for the airline and provides much-needed certainty towards a restructured SAA,” he added in a statement.
Dongwana said the Department of Public Enterprises (DPE), the ministry responsible for SAA, had said it would give the administrators a letter with a funding commitment on Wednesday, in time for a deadline stipulated in the rescue plan.
The DPE told Reuters last week it was on track to make the funding commitment.
It is not yet clear where funding will come from, after the finance minister allocated no new money to SAA in an emergency budget. The government says it has been talking to investors and potential partners, but has given few details.
The DPE’s acting director-general, Kgathatso Tlhakudi, told the creditor meeting the government should announce preferred strategic equity partners soon for SAA Group and its business units. He added an interim board of directors for the new SAA would be revealed soon.