Riyaz Patel
The Public Enterprises Minister has confirmed that South African Airways (SAA) will be placed into business rescue immediately.
Pravin Gordhan said the the decision was taken by its board and supported by government.
The news follows the leaking of a letter on Wednesday evening from President Cyril Ramaphosa to Cabinet, stating that the national airline must enter voluntary business rescue.
“This is the optimal mechanism to restore confidence in SAA and to safeguard the good assets of SAA and help to restructure and reposition the entity into one that is stronger, more sustainable and able to grow and attract an equity partner,” said Gordhan.
He said SAA’s reliance of government finances must be reduced as soon as possible.
But, he added, government will give SAA an additional R2 billion, “a fiscally neutral manner” to help keep the airline operational.
“It must be clear that this is not a bailout,” Gordhan emphasized.
“Surely, when you look at SAA as a whole, you have to stop and ask yourself when you keep receiving bailouts, at what point in time is the board of directors trading recklessly and is this not a decision for SAA to have considered business rescue far sooner?
“So, the test which one is to consider in the business rescue is, can you pay your debts as and when they fall due and payable in the ensuing six months.”
The business rescue process will begin on December 5, Gordhan said, adding that a business rescue practitioner will be chosen to take charge of the business.
Gordhan had said the weeklong strike by members of Numsa and the SA Cabin Crew Association had “caused immense damage to the reputation, operations, and the deterioration of the finances of SAA.”
SAA previously said the strike had cost it an estimated R50m per day.
Numsa denied the strike crippled the airline, arguing the state-owned entity was already in dire straits and the industrial action was, in part, initiated to force the airline to improve its governance.
The union said it would be providing comment on the business rescue decision Thursday.
