BUSINESS NEWS - South African Airways (SAA) could have to suspend some flights and delay salary payments if the government can’t come up with a plan soon to provide the R2 billion it promised the airline last month, a trade union official said on Wednesday.
State-owned SAA entered a form of bankruptcy protection last month in an effort to rescue the company and 10 000 related jobs. At the time it was promised R2 billion from the government and R2 billion from lenders.
But unions briefed by the specialists appointed to turn around the carrier were told on Wednesday that the government had not yet been able to provide its portion of the funds and that the 2 billion rand from lenders had been exhausted, National Transport Movement president Mashudu Raphetha told Reuters.
Unions were told SAA’s business rescue practitioners needed clarity from government on the R2 billion of promised funding by the end of January 19, Raphetha said.
Les Matuson and Siviwe Dongwana, the business rescue practitioners, said in a statement: “We remain hopeful that a mechanism can be found to unlock the 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. … The liquidation of SAA is not one such current scenario,” the statement added.
A public enterprises ministry spokesman was not immediately available for comment.
In a statement on December 20, Matuson and Dongwana said there was a “reasonable prospect” of rescuing SAA.
SAA is one of several state companies mired in financial crisis after nearly a decade of mismanagement and corruption in Africa’s most industrialised economy.
The national carrier’s case is seen as a test of President Cyril Ramaphosa’s resolve to carry out badly-needed reforms.
Finance Minister Tito Mboweni said on Thursday that the government was still trying to find additional financing for SAA.
Mboweni was speaking at a meeting with business leaders in Johannesburg to discuss what message they will take to the World Economic Forum in Davos this year.
“National Treasury has provided financial support (to SAA) to the best of our abilities,” he told the delegates.
“As of yesterday when I was speaking to the director-general of National Treasury we were still trying to find additional financing for SAA. … Let’s keep our fingers crossed.”
State-owned SAA entered a business rescue — a form of bankruptcy protection — last month in an effort to rescue the company and around 10 000 related jobs.
It was promised R2 billion from the government and another R2 billion from lenders in order to make that happen.
The national carrier is one of several state entities struggling under mountains of debt after nearly a decade of mismanagement, including state power company Eskom.
Without that promised cash, SAA could very quickly become insolvent. On Wednesday the business rescue practicioners — Les Matuson and Siviwe Dongwana — said they were “hopeful that a mechanism can be found to unlock the liquidity constraints.”