Fri, 28 Feb 2020

Despite not yet being able to contribute R2bn as part of its commitment to the business rescue process of SAA, the department of public enterprises says it is working with National Treasury to raise funds to keep SAA in the skies.

The department issued a statement on Sunday evening in which it reassured its commitment to the business rescue process. This follows reports last week that the business rescue practitioners had not yet received the required R2bn, while the airline is facing a cash crunch.

Last week Finance Minister Tito Mboweni told journalists at the sidelines of a pre-WEF breakfast, that Treasury was still "trying to find additional financing" for the airline.

SAA was placed under business rescue in December last year. At the time both government and creditors jointly committed R4bn to the process as post-commencement finance (PCF).

Business rescue practitioners Les Matuson and Siviwe Dongwana met with creditors later in December, and this past week met with unions - to get their proposals on the business rescue plan, which will be finalised in February.

The Department of Public Enterprises also met with practitioners this past weekend, amid the airline facing liquidity constraints.

"Following a meeting with the Practitioners at the weekend, the Department of Public Enterprises is engaging with the National Treasury to raise funds for the airline in line with the PCF undertaking.

"We are determined to contribute to the Business Rescue process so that we could minimise job losses and give birth to a rejuvenated SAA that all South Africans could be proud of. Collective effort is needed to make SAA as a premier African airline and Star Alliance member," the Department of Public Enterprises (DPE) said.

Govt readies asset sales as SAA faces funding crisis

The DPE also assured that government wants to break "past patterns of bailouts" which have become a "moral hazard". The business rescue process is expected to help government reposition its state assets in a way such that it does not "continue to burden the fiscus" and taxpayers.

The DPE also reiterated previous statements that government intends to help aid the turnaround of SAA with a strategic equity partner. "The creation of a sustainable, competitive and efficient airline with a strategic equity partner remains the objective of government through this exercise," the department said.

"The Government continues to work with the Business Rescue Practitioners, with the primary goal of bringing out of this process a restructured, modern airline that is able to bring million more tourists and be a beacon of both business innovation and efficiency," the department added.

A spokesperson for the business rescue practitioners has also confirmed that SAA flights remain operational.

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