South African Airways (SAA) has been on the brink of collapse for some months now. While the government of South Africa says it is fighting to find a sustainable solution to keep its national airline operating, the airline is about to face liquidation due to the government’s inability to provide funding to continue operations.
At the beginning of this week, the airline said that it was hoping for an additional short term injection of cash to continue its business rescue proceedings. The carrier was placed under the control of ‘Business Rescue Practitioners’ (BRP), who were looking to the government for funding by Thursday, September 17th. The following ‘Notice to Affected Persons’ was posted on the BRP’s website (Matuson Associates) on September 17th:
“The BRPs hereby advise affected persons that the anticipated funding has not been received by the Company in accordance with the commitment from Government to provide the funding for the restructuring of the Company and the implementation of its business rescue plan.”
The notice further explained that a meeting of creditors will be convened today, September 18th at 11:00 South African Standard Time to “engage with affected persons on this issue and the proposed future of the Company taking into account all relevant factors.”
According to Business Tech, the BRPs had previously said that the national airline requires R10.1 billion by September 17th. This is the equivalent to $620 million.
South Africa’s Department of Public Enterprises (DPE) said it is aware of the creditor’s meeting that has been called to discuss the future of the airline. It also acknowledged the plan for protests to be held outside the airline’s offices on Friday.“The DPE remains sympathetic and deeply mindful of the plight of SAA employees,” Business Tech reports.
The department listed several critical steps needed to rescue the airline. They include:
- The finalization and implementation of the business rescue process;
- Following this, the restructured airline must resume operations with the appointment of a new board and executive team;
- And finally, securing a credible strategic equity partner able to introduce the required technical, financial, and operational expertise into the business.
“The department recognizes the interests of workers and creditors. We call upon employees and the creditors to be patient while we conclude the efforts to find a constructive outcome,” -Department of Public Enterprises, Government of South Africa via Business Tech