SAA exits bankruptcy protection with equity deal in sight

South African Airways (SA, Johannesburg O.R. Tambo) has exited bankruptcy protection with its administrators declaring it “both solvent and liquid” and “adequately set to continue into the future”. It addition, its sole shareholder, the South African government, is poised to conclude a deal with a strategic equity partner “in the next few weeks”. This follows the filing on April 30, 2021, of a “Notice of Substantial Implementation” of SAA’s business rescue plan with South Africa’s Companies and Intellectual Property Commission (CPIC) by the joint business rescue practitioners (BRPs), Siviwe Dongwana and Les Mathuson. “The filing of the notice for substantial implementation means that the BRPs have effectively discharged the business rescue and handed over the operations of SAA back to its board and executive team with immediate effect,” they announced in a statement. “A significant portion of the debt that hamstrung SAA has since been compromised and the balance thereof transferred to the Receivership, a vehicle specifically intended to ensure the debt is paid over the next three years,” they said. Dongwana and Bongani Nkasana, a Johannesburg-based chartered accountant, have been appointed as the Receivers of SAA. They will be in charge of distributing what is owed to creditors and ticket holders over the next three years. Meanwhile, government efforts to find a strategic equity partner for SAA are being finalised, according to a statement by the Department of Public Enterprises (DPE). It said SAA’s interim Board and management would develop and implement “an interim business plan to sustain the operations while a strategic equity partnership (SEP) is being finalised”. “Government is in the final stages of negotiations with the preferred SEP, and a purchase and sale agreement should be concluded in the next few weeks. This will enable capital, and much-needed technical and commercial expertise to be brought in to ensure a competitive flag carrier emerges,” it said. “The interim Board of SAA is mandated to oversee the strategic, financial, and operational management of the subsidiaries of SAA, South African Airways Technical (SAAT), Airchefs, and Mango Airlines (JE, Johannesburg O.R. Tambo) and ensure their commercial sustainability. These subsidiaries will need to be restructured and in some instances, the case for continued existence must be assessed,” it said. Mango was grounded on April 28, 2021, by the Airports Company South Africa (ACSA) over unpaid passenger service charges, landing, and parking fees. Mango and SAA’s Boards have requested the low-cost carrier be placed in business rescue from May 1 to July 2021, or until it receives state funding. However, the company in a short statement late on April 30 said that “Mango Airlines continues to operate as normal tomorrow, Saturday, May 1, 2021, and beyond, except for Zanzibar at this stage. We will update the public sometime next week on this route”. According to FlightRadar24 ADS-B data, only one of the airline’s fourteen B737-800s, ZS-SJA (msn 29248), was operating flights on May 1 between Johannesburg O.R. Tambo, Cape Town, Durban King Shaka, and Port Elizabeth. Meanwhile, Mango’s ZS-SJF (msn 3006) appeared to have been returned to lessor Macquarie AirFinance as the aircraft was ferried from Johnnesburg via Addis Ababa to Budapest between April 29 and April 30, 2021, FlightRadar24 ADS-B data revealed.