The Department of Public Enterprises (DPE) has confirmed that the government will reprioritise funds to finalise the restructuring of South African Airways (SAA) and the implementation of the airline’s business rescue plan.
An announcement to this effect will be announced in the Adjustments Appropriation Bill, which will be introduced in Parliament soon, the department said in a statement on Friday afternoon (18 September).
“The national carrier will not be liquidated,” it said. “Because the restructuring process should be brought closer to finalisation in the next few weeks, lending institutions will be requested to finance the restructuring process and honour commitments for voluntary severance packages and retrenchment. ”
At the same time, the DPE said it will continue to assess the 20 unsolicited expressions of interests from private sector funders, private equity investors and partners for a future restructured SAA.
“The DPE is sympathetic to the plight of SAA employees while continuing to work with other government departments, including the National Treasury, to make sure that the airline’s restructuring plan will be successfully implemented.
“In charting the way forward, the DPE believes the key to solving the difficulties facing SAA, is the finalisation and implementation of the business rescue process, followed by the start of a restructured airline, appointment of new non-executive directors and leadership team and securing a credible strategic equity partner who can introduce the required technical, financial, and operational expertise into the business.”
Bloomberg has reported that the Ethiopian Airlines Group is among companies in talks with South Africa’s government about potentially offering support to SAA.
Africa’s biggest carrier is considering ways to help bankrupt South African Airways fly again after more than five months of dormancy, said the people, who asked not to be identified as the talks are private.
Taking a stake in the carrier is one of the options under discussion, they said, though negotiations are ongoing and an agreement may not be reached.
South Africa needs to raise more than R10 billion to revive SAA, according to a rescue plan compiled by administrators and backed by both the state and labour groups.