The business rescue practitioner for SAA, Les Matuson, wants a firm commitment by Sunday on whether the government can raise the R2bn it promised to fund the business rescue process.
If the money is not forthcoming, the airline will suspend certain flights.
Matuson said on Thursday that he is not considering liquidation, because that would mean that all the businesses under the SAA holding company would be liquidated. These would include not only the airline but also low-cost carrier Mango; catering company Air Chefs; and aircraft maintenance company SAA Technical.
“SAA, as typical for a company under business rescue, remains under liquidity constraints. Government continues to indicate its support for the business rescue process, and together we are considering various scenarios to keep the entity operational.
“We remain hopeful that a mechanism can be found to unlock the liquidity constraints. The liquidation of SAA is not one such current scenario,” he said in a statement on Thursday.
Matuson is expected to table a plan to creditors by February 14. But if the money is not raised, SAA will not be able to last that long in its present form.
In December, public enterprises minister Pravin Gordhan said the business rescue process would be funded by R2bn accessed from lenders and repaid from future budget appropriations, and R2bn from the Treasury. The second R2bn, he said, would be raised in a “fiscally neutral manner”.
However, that funding has not materialised. Finance minister Tito Mboweni said on Thursday that the government “was still trying to find additional funding for SAA”.
Mboweni, who has previously advocated selling or closing the airline, said that given its financial and operational crises, the country has reached a point at which “certain decisions have to be made”.
Officials from the department of public enterprises and Treasury met on Thursday to discuss a solution, but the outcome of the meeting was not made public.
It emerged on Thursday that SAA had issued a tender last week for the sale of nine commercial A340 aircraft. But rather than this being a fire sale of assets, the transaction had long been anticipated by SAA, which has already replaced the aircraft with the A350, a newer model.
Aviation industry sources said that because the aircraft were old, the sale was not expected to raise large amounts of money and the aircraft would most likely be sold for parts.
SAA’s acting CEO, Zuks Ramasia, said the decision had “nothing to do with the business rescue process”.
On Thursday, employee representatives met again with Matuson, this time to persuade him to take former CEO Vuyani Jarana onto the expert team advising him on the restructuring. Jarana was well liked at SAA by employees and had assembled what they believed was a viable plan to save the airline.
The union Solidarity, which prior to the business rescue process being initiated by the SAA board had made a court application for business rescue, had asked the court that Jarana be brought in to advise on the restructuring. Solidarity’s application was rendered moot by the voluntary business rescue process.
The business rescue practitioners are advised by global management consultancy Alvarez & Marsal, which played a key role in the restructuring of Edcon and led the global winddown of investment bank Lehman Brothers in 2008.
Solidarity’s Derek Mans said the union wanted an adviser with a local and historical perspective in addition to this. Solidarity, the SA Cabin Crew Association (Sacca), the NTM and the SA Transport and Allied Workers Union expressed anxiety over the government’s failure to deliver on its undertaking to provide the R2bn funding.
“We had expected that on Wednesday at the employee meeting with the business rescue practitioner we would hear about the options to save SAA. But we were given no information and told that everyone is now waiting for government. It shows bad faith by government, which said they wanted to do business rescue but have not provided the money for it,” said Sacca president Zazi Sibanyoni-Mugambi.
On Thursday, privately owned airline SA Airlink, which has previously had a franchise agreement with SAA and shared a booking code, said it had redefined the arrangement and would fly under its own code from June.
The company said the new arrangement would give it the freedom to extend its commercial reach, develop more routes and frequencies on an independent basis, and extend or establish additional agreements with other leading international airlines.
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