SAA advises employees of ‘intense talks’ with the government
The embattled state-owned airline needs to secure R2bn in working capital urgently if it is to continue trading
SAA has told employees in a notice issued earlier on Friday that it is in “intense discussions” with the government over the airline’s financial position, but that it is unable to update them at this point.
The state-owned airline needs to secure R2bn in working capital urgently if it is to continue trading or will face the prospect of business rescue or liquidation. It has, however, released payments to staff for the remaining 50% of their November salaries, which had been delayed.
SAA spokesperson Tlali Tlali said in a statement on Friday afternoon that “all employees, depending on their financial services provider, will start getting the 50% of their salaries for the month of November from today. Some of the employees are in receipt of the outstanding amounts already”.
The operational update, also sent out on Friday by executive chair Thandeka Mgoduso, reads: “SAA is facing challenging times. The SAA board and executive committee are in intense discussions with the shareholder to address this situation. These discussions are still continuing. An update will be provided as soon as an outcome is known.”
SAA and the department of public enterprises have said they have lined up commercial banks to provide funding but creditors require a full government loan guarantee from the National Treasury. The extension of the guarantee has not yet been granted.
Finance minister Tito Mboweni has previously said that SAA should be sold as its turnaround is proving impossible and it is a drain on public resources.
Market jitters are growing with one of SA’s largest travel companies issuing a “stop-sell” on SAA tickets on Thursday and Santam’s travel insurer TIC withdrawing insolvency cover for new ticket sales.
Neither the department of public enterprises nor the Treasury has communicated on the outcome of the past two days’ talks. The department said on Wednesday that it is clear that SAA cannot continue “as is” and said it is engaged in putting together a “support initiative”.