South African Airways’ Business Rescue Practitioners (BRP) say that, with no more financing coming from government, there are only two options left for the failed airline – and both have it closing its doors.
The first option, the administrators said, is a winding down process, where all contracts with employees will be terminated by agreement – along with retrenchment packages.
An asset sale would then take place, the proceeds of which will go to creditors and other stakeholders.
If the first option doesn’t work – specifically, if an agreement with unions and workers can’t be reached on retrenchments – the airline will have to enter into liquidation, the administrators said.
The BRPs said that they do not have enough money to see to SAA’s financial obligations beyond 30 April 2020.
The administrators said that they provided unions with a proposal on the retrenchment plans, warning that they only have until Friday, 24 April, to respond.
SAA has relied on bailouts and state-guaranteed debt agreements for years, having last made a profit in 2011, and was put into a form of bankruptcy protection in December.
Public Enterprises Minister Pravin Gordhan said last week that the cost of staving off the Covid-19 pandemic in the country meant no more cash could be extended, while Finance Minister Tito Mboweni said the carrier’s closure could help shore up state finances.
The coronavirus may prove the final nail in the coffin for SAA, which was reducing routes and considering job cuts even before the outbreak forced airlines around the world to ground planes.