Picture: BLOOMBERG/WALDO SWIEGERS
Picture: BLOOMBERG/WALDO SWIEGERS

The business rescue practitioners of SAA handed the airline back to its interim board and management on Friday, filing a substantive report of implementation to bring the business rescue process to an end.

This despite the airline having not yet received the full R10.3bn required to fund the rescue plan. So far, only R7.8bn of the amount has flowed, leaving several outstanding liabilities still to be paid. SAA will also need additional working capital to resume operations.

SAA has been in business rescue since December 2019.

The notice was filed with the Companies and Intellectual Property Commission, which regulates companies, on Friday.

In a statement, the practitioners said the airline is now “solvent and liquid” and the remaining debt will be paid through the receivership, an account that will manage the accounts of the “old SAA”. The remaining liabilities are for concurrent creditors (R600m), lessors (R1.7bn) and unflown ticket liabilities, and will be paid over three years.

“A significant portion of the debt that hamstrung SAA has since been compromised and the balance thereof transferred to the receivership, a vehicle specifically intended to ensure the debt is paid over the next three years. Thus, the practitioners are leaving both a solvent and liquid SAA adequately set to continue into the future. The filing of the notice for substantial implementation means that the [practitioners] have effectively discharged the business rescue and handed over the operations of SAA back to its board and executive team with immediate effect,” they said.

However, due to a funding shortfall and the Covid-19 pandemic, the airline is nowhere near ready to resume full operations. Interim CEO Thomas Kgokolo, who was appointed during April, has said some operations may resume in July.

SAA still requires the outstanding R3.5bn to complete the rescue plan, as well as working capital to fund operations. The department of public enterprises has said it is hopeful the R3.5bn will be forthcoming from the Treasury. However, finance minister Tito Mboweni said in February he was still considering that request.

The additional working capital is expected to come from a strategic equity partner or partners. The department and Gordhan have repeatedly said talks are under way and an announcement will be made shortly.

Meanwhile, SAA’s subsidiaries are in dire straits despite attempts by Gordhan to divert money from SAA to them. This has not yet been possible due to delayed parliamentary processes and Treasury red tape. Mango was forced to temporarily halt operations this week and SAA Technical commenced retrenchment operations.

The department of public enterprises welcomed the return of SAA.

However, this does not mean that the work is finished. The board and management will be developing and implementing an interim business plan to sustain the operations while a strategic equity partnership is being finalised, it said in a statement on Friday.

The department said the government was in the final stages of negotiations with the preferred SEP [strategic equity partner] and a purchase and sale agreement should be concluded in the next few weeks.

The interim board of SAA is mandated to oversee the strategic, financial and operational management of the subsidiaries of SAA, SA Airways Technical, Airchefs, Mango and ensure their commercial sustainability. These subsidiaries will need to be restructured in some instances, the case for continued existence must be assessed.

patonc@businesslive.co.za

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