Draft South African Airways rescue plan proposes new airline

A draft business rescue plan for embattled national carrier South African Airways (SA, Johannesburg O.R. Tambo) would see the government spending ZAR2 billion rand (USD114 million) on the capitalisation of a new company and nearly ten times that on tying up the old airline. A proposal by the business rescue practitioners (BRPs) Siviwe Dongwana and Les Matuson sent to the media by the opposition Democratic Alliance (DA) party on June 1, would see the state settle the airline’s commitments and establish a new entity (New HoldCo) owned by the Department of Public Enterprises (DPE). This would oversee low-cost subsidiary Mango Airlines (JE, Johannesburg O.R. Tambo), SAA Technical, and Air Chefs as well. The state would have to spend ZAR16.4 billion (USD930 million) to pay SAA’s lenders, ZAR600 million (USD34 million) on current creditors, ZAR2 billion to settle retrenchments, and ZAR2 billion on the new entity. The BRPs made it clear the plan was still a draft, with consultations still ongoing. They will submit their draft plan for comment by June 8. They said the coronavirus pandemic has impacted their work and was one of the reasons for multiple extensions being requested.