SAA lands partial funding for restructuring plan

The administrators of South African Airways (SA, Johannesburg O.R. Tambo) will decide on the future of the airline next week after having engaged with “certain funders” who are willing to provide a portion of the ZAR10 billion rand (USD590.4 million) required for the implementation of the airline’s business rescue plan. This is according to a letter to stakeholders, in which the administrators said “certain progress” had been made to secure the funding, subject to certain terms and conditions. “The business rescue practitioners and the (South African) government have engaged with certain funders that have indicated a willingness to provide a portion of the funding required for the implementation of the business rescue plan,” they said. The administrators have now engaged the government regarding the remaining funds needed to fully implement the plan; and what the implication would be if SAA receives only part of the required funding. They would be able to determine next week on how to proceed. In the meantime, all of SAA’s remaining operations will be suspended with immediate effect and the airline will be placed under care and maintenance until funding discussions are completed, the administrators said. While the airline, in business rescue since December 2019, has not been operating commercially, it has been conducting repatriation, humanitarian and charter flights on contract. Louise Brugman, spokesperson for the administrators, said SAA would honour all its existing repatriation and cargo contracts, including those for the World Food Programme, but no new ones would be accepted. SAA and its low-cost subsidiary Mango Airlines (JE, Johannesburg O.R. Tambo) have also been affected by SAA Technical withdrawing maintenance services because of unpaid bills. SAA’s business rescue plan was approved in July 2020 on the commitment from the government that it would raise the necessary funding. In September, the administrators warned the airline faced liquidation as it was running out of cash with no funding forthcoming. The government then announced it would reprioritise existing departmental budget allocations to find the money in a “fiscally neutral way”, a controversial move understood to have resulted from political pressure exerted on the National Treasury, which does not support further bail-outs of SAA.