ON THE MONEY
STUART THEOBALD: Drastic move of putting SAA into business rescue may be only way to save airline
It’s time to think the unthinkable: business rescue may be the one thing that changes the national carrier’s fortunes for good
Should South African Airways (SAA) be put into business rescue? Such a drastic move would allow SAA to deal with its crippling debt burden and reorganise its business into something viable. In its absence, the only choice is for the government to continue pumping billions into the national airline. There would be some very big risks in doing so, including triggering a loss of confidence in far bigger government entities, but if it is done wisely it might well be the best option. SAA has made a meal of the fact that the government is its shareholder. It has allowed it to borrow far more than the strength of its balance sheet would justify on its own. But that preferential lending status has to end at some point. It is reminiscent of Greece during the European debt crisis: having grown used to borrowing at the EU’s credit rating, the wheels came off when creditors suddenly started treating Greece as if it would have to rely on its own balance sheet. SAA is now facing a similar situati...
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