The National Treasury has committed to support and source funding for South African Airways’ new business rescue plan.
This funding will result in the emergence of a new viable, sustainable, competitive airline, the Department of Public Enterprises said in a statement on Thursday (16 July).
In terms of the business rescue plan, government as the sole shareholder of SAA is required to provide a letter of support for funding the plan.
It is projected that R10.1 billion will be required to fund the plan. This money will be used to:
- Clean up and establish the balance sheet;
- Restructure the rest of the group entities that are not in business rescue;
- Provide working capital for the rest of the group’s entities;
- Create a stable and viable platform for a new restructured national airline.
The restructuring will also include severance packages to about 2,700 SAA employees who will be retrenched, the Department of Public Enterprises said.
DPE WELCOMES COMMITMENT TO SOURCE FUNDING AND SUPPORT NEW SAA pic.twitter.com/HdMfVXlSIW
— DPE_ZA (@DPE_ZA) July 16, 2020
“The DPE is cognisant that airlines across the world are in turmoil due to the Covid-19 pandemic. There are possibilities for airline partnerships to improve the scale and scope of the aviation industry and ensure continuity of value creation to the South African economy,” it said.
“While maintaining a certain level of presence in the ownership of the new carrier, the DPE welcomes the attraction of a mix of local and international investor groups to provide the airline with technical, financial and operational expertise to ensure significant South African ownership whilst diversifying the investor base.”