SAA rescue process to be finalised end of March
South African Airways’ (SAA’s) business rescue process is expected to be finalised at the end of March, according to the airline’s business rescue practitioners (BRPs) Siviwe Dongwana and Les Matuson.
Dongwana and Matuson notified the airline’s creditors and employees on Thursday that they expect to finalise the outstanding issues such as payments to post-commencement creditors and payments to employees. Once these issues are finalised they say they will file a notice of substantial implementation with the Companies and Intellectual Property Commission (CIPC) which will result in the end of the business rescue process.
The BRPs are then expected to exit the airline and hand over SAA’s affairs to the interim board and management. Although no date has been given for the resumption of flights, the rescue practitioners say the board and the management are working on the plan, SAA has already received R2 billion in working capital to resume operations.
SAA entered into business rescue in December 2019 following years of mismanagement and corruption, which left the airline in dire straits and unable to pay its debts.
The long-drawn out business rescue process is not unusual, according to Dongwana and Matuson, as the average business rescue process in South Africa can take up to 16.4 months.
The pair have blamed the government for the delay in providing the required funding for the payment of creditors and to implement the business rescue process plan. “It was only in October 2020 (11 months since the commencement of the rescue), the government eventually allocated R10.5 billion for the implementation of the plan; R7.8 billion of those funds were only received at the end of February 2021,” the BRPs say.
The rescue practitioners have been allocated R26.9 billion since February last year: R16.4 billion to go towards payment of the airline’s lenders and R10.5 billion to implement the business rescue plan (approved by creditors in July last year) and to recapitalise SAA subsidiaries, SAA Technical, Mango and Air Chefs.
SAA has received R7.8 billion of the funds which were allocated for the implementation of the business plan in the 2020 medium-term budget policy statement. This amount covers payments to employees, payments to post-commencement creditors and unflown ticket liabilities.
The rescue practitioners have disbursed R360.7 million to 3 888 employers for three months of unpaid salaries and R1.55 billion to 3 140 employees for voluntary severance packages. This represent over 85% of employees. Post-commencement creditors have received R400 million so far, with the balance of funds expected to be disbursed by the end of March.
