South African Airways (SAA) has been granted an extension to the deadline on when to publish its Business Rescue Plan. The extension was requested by the Business Rescue Practitioner, Les Matuson.
The embattled national carrier had until the 13th of January to publish the plan, but Matuson along with co-practitioner Siviwe Dongwana met with creditors and requested the extension which was approved.
SAA now has until the 28th of February to publish the plan. Matuson says there is a reasonable chance that SAA can be saved.
His team argues that rescuing SAA would be a better outcome for all stakeholders than liquidation.
Matuson says in an event of liquidation of SAA, proceeds would all go to certain creditors at the expense of others. If the national carrier shuts down – about 10 000 employees stand to lose their jobs.
Earlier this month the government put SAA into business rescue – a form of bankruptcy protection where a specialist advisor takes control of a company to restructure it – after a strike exacerbated financial problems and left it at risk of going bust.
The national carrier is one of several state entities that are deeply in the red after nearly a decade of mismanagement and corruption, the most troubling of which is state power company Eskom.
SAA’s case was seen as a test of President Cyril Ramaphosa’sresolve to carry out badly-needed economic reforms. Ramaphosathis month promised “drastic action” to turn around cash-strapped and highly indebted state firms.
“SAA leases most of the aircraft and accordingly in liquidation, there will be limited assets which can be realized for distribution to creditors,” the rescue specialists noted in their statement.
NOT CLEAR OF RUNWAY YET
While their decision is a vote of confidence in SAA – once Africa’s biggest airline and a former source of patriotic pride- its future remains unclear, as does how many jobs can be saved.
It has not made a profit since 2011 and has received more than 20 billion rand ($1.4 billion) of government bailouts over the past three years.
Matuson said creditors had approved an extension to the deadline to present a plan for SAA’s rescue until the end of February next year. Before it is finalised, employees and creditors will need vote on the plan. Any cuts to jobs or wages could prove sensitive.
Mashudu Raphetha, president of the National TransportMovement, which represents SAA workers, told Reuters the union had met with the rescue practitioners.
“We remain optimistic of a positive outcome, in these trying times,” he said.
Phakmile Hlubi, spokeswoman of the National Union of metalworkers of South Africa, the other SAA union that went on strike last month, confirmed they had also met with the rescue experts but gave no further comment.
Some analysts had questioned the affordability of a 4billion rand lifeline stumped up by the government in order to launch the rescue plan. A spokesman for the bureau of public enterprises declined to immediately comment. -Additional reporting by Reuters
