Cabinet supports SAA restructuring plan, okays equity sale

Cabinet supports SAA restructuring plan, okays equity sale

South African government supports restructuring proposals for SAA that include job cuts as well as the introduction of equity partners in the long troubled airline.

In a statement released on Friday, Cabinet said it was in support of “… the concerted effort to mobilise funding from various sources”, including the introduction of potential equity partners.

On Thursday 69% of the state-owned airline’s creditors voted to have a meeting to vote on a proposed rescue plan adjourned until 14 July. In terms of the plan, government must come up with the necessary funding in terms of the proposed plan – about R10.3 billion – by 15 July.

In mid-April the Department of Public Enterprises, representing government as shareholder in the airline, informed the rescue practitioners that there will be no more government funding available. This was indeed reflected in no money allocated to SAA in Finance Minister Tito Mboweni’s supplementary budget announced on Wednesday.

Government is now pinning its hopes on finding a strategic equity partner and, according to the acting director general of the DPE Kgathatso Tlhakudi, there are “some serious players” interested in the value SAA offers. Tlhakudi even indicated that government might consider only taking a minority stake in the airline alongside such a private investor.

“Cabinet maintains that a positive vote from creditors to finalise the business rescue process is still the most viable and expeditious option, for the national carrier to restructure its affairs which include its business, its debt and other liabilities,” it said in a statement on Friday.