SAA is again in a perilous situation after the R2bn it was promised by the Treasury to fund the business-rescue process failed to materialise.
Without this funding the national airline could be forced to suspend flights by January 19, and could go into liquidation, which involves selling its assets to pay creditors.
SAA was placed in business rescue in December as it did not have working capital to fund operations. It had made accumulated losses of R28bn over the past 13 years, requiring successive bailouts to stay afloat. However, the Treasury and commercial lenders had drawn the line on further support.
Announcing the business rescue, public enterprises minister Pravin Gordhan said the airline would receive R4bn in post-commencement financing to enable the business to continue. while a rescue plan was put in place.
Half of this was to come from existing lenders and would be repayable from future budget appropriations; and R2bn from the Treasury, which would be provided in "a fiscally neutral manner".
While the R2bn from lenders was made immediately available to provide its share in "a fiscally neutral manner", the Treasury was required to sell assets, which it has been unable to do within the narrow timeframe.
Rescue practitioner
The Treasury referred questions to the department of public enterprises, which also would not say anything other than that business rescue practitioner Les Matuson was in charge of the process.
The government, which is the sole shareholder, was, however, being kept in the loop on the post-commencement financing and the reliance on a capital injection, said a public enterprises department source.
A spokesperson for Matuson, Louise Brugman, was unable to answer questions but confirmed on Monday that the funds were needed and had not been received.
SAA employs about 10,000 people across the parent company and subsidiaries.
On Wednesday, Matuson met SAA trade unions and informed them that the government had undertaken to provide a decision on the funding by January 19. "If they don’t get the money by the 19th then they will have to suspend flights," said a trade union participant.
It is believed that intense efforts are under way to persuade lenders to extend another R2bn in bridge financing to be repaid when the Treasury raises the funds from asset sales. But as the banks had extended the first R2bn only on the basis that it had already been pencilled into the adjustment budget in October, further commercial financing will be hard to secure, said an individual with knowledge of what has transpired thus far in the credit committee.
No legal mechanism
It is believed that Treasury officials are concerned that they do not have a legal mechanism to pay the second R2bn as it has not been catered for in budget allocations.
They are therefore convinced that they cannot, at this point, support SAA.
Matuson’s task is to manage the business during the rescue process and to table a rescue proposal for acceptance by creditors. In his first statement on December 20, he said he had asked for an extension until the end of February to present the plan.
While he said that SAA had "a reasonable chance" of surviving, he hinted at its dire situation, saying that if the airline were to be liquidated ordinary creditors would stand to receive nothing after claims of preferential creditors were settled.
These include the entities that provided post-commencement finance, aircraft lease agreements and employee claims.
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