Cape Town, South Africa | XINHUA | The South African government reaffirmed on Friday that it will not liquidate embattled South African Airways (SAA).
Instead, the government will reprioritize funds to finalize the restructuring of the SAA and the implementation of the airline’s business rescue plan, the Department of Public Enterprises (DPE) said in a statement.
An announcement to this effect will be announced in the Adjustments Appropriation Bill, which will be introduced in Parliament soon, the department said.
The DPE, the sole shareholder of the SAA, issued the statement after failing to acquire urgent funding for the state-owned airline’s business rescue process, thus putting the SAA in danger of being liquidated.
The DPE missed the Sept. 17 deadline to provide at least 10.5 billion rand (about 636 million U.S. dollars) for the airline to be restructured.
The department requested lending institutions to finance the restructuring process and honor commitments for voluntary severance packages and retrenchments because the restructuring process should be brought closer to finalization in the next few weeks.
The DPE will continue to assess the 20 unsolicited expressions of interests from private-sector funders, private equity investors and partners for a future restructured SAA, the statement said.
The department is sympathetic to the plight of SAA employees while continuing to work with other government departments, including the National Treasury, to make sure that the airline’s restructuring plan will be successfully implemented, the statement said.
The key to solving the difficulties facing the SAA is the finalization and implementation of the business rescue process, the DPE said.
This should be followed by the start of a restructured airline, appointment of new non-executive directors and leadership team, and the securing of a credible strategic equity partner who can introduce the required technical, financial, and operational expertise into the business, the statement said.
The SAA went into business rescue in December last year due to heavy financial losses.
The airline has relied on government bailouts for continued operation. Over the past 13 years, the airline has incurred over 28 billion rand (about 1.7 billion dollars) in cumulative losses.
The government has allocated about 30 billion rand (1.8 billion dollars) to bail out the airline over the past decade.