Government says it has received proposals from private funders for ‘new SAA’

The Department of Public Enterprises says it has received an expression of interest in a new and restructured South African Airways (SAA).

The department said that the airline, which is currently in business rescue proceedings, has received unsolicited proposals from private sector funders, private equity investors, and potential airline partners for a new national airline that must emerge from the business rescue process,

“Government is intent in pursuing credible proposals for investment and strategic partnerships with the private sector, as well as equity participation for employees.

“Such partners will also introduce technical, financial and operational expertise,” it said.

The department added that due to the ongoing coronavirus pandemic there are possibilities for áirline partnerships’ to improve scale and scope and ensure the long-term sustainability of the local aviation industry.

Government has pledged its continued support for a national airline, despite concerns about the viability of SAA.

SAA was put into business rescue on 6 December 2019. In terms of the Companies Act, it was subsequently placed under the complete direction and control of Business Rescue Practitioners (BRPs).

In a rescue plan published on Tuesday (16 June), the BRPs proposed government put up at least R26.7 billion to rescue the carrier – this, after years of losses and the grounding of commercial passenger flights to contain the spread of coronavirus.

It also indicated that a number of substantial cuts will need to be made, including a drastic reduction of the workforce.

Responding to the plan, the Department of Public Enterprises said that the aviation industry in South Africa requires the capabilities of an SAA that is ‘reconstituted, restructured and reinvigorated’, without the legacy burdens, including corruption, poor leadership and unsustainable costs, which have beset the airline’s past.

“As the shareholder of SAA, government, taking into account the broader national interests, has made it clear that the desired outcome should be to establish a viable, sustainable national carrier that must emerge from the business rescue process,” it said.

Read: Government fights new push to liquidate SAA

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Government says it has received proposals from private funders for ‘new SAA’