Government commits to funding “New SAA”
The Department of Public Enterprises (DPE) has announced that the National Treasury has committed to providing funding for the creation of a new South African Airways (SAA) airline.
“The Department of Public Enterprises welcomes the commitment by National Treasury that the government will support and source funding for a business rescue plan for South African Airways (SAA), which will result in the emergence of a new viable sustainable, competitive national airline,” the DPE said.
The government has committed to providing funding for the “short, medium, and long-term requirements to create a viable and sustainable national airline,” with the commitment being signed by the Ministers of Finance and Public Enterprises on 15 July.
This letter was provided to SAA’s business rescue practitioners, acting as a letter of support of funding for the airline’s business rescue plan.
The BRPs have projected that an amount of R10.1 billion will be required to fund the rescue plan and address the following tasks:
- Clean up and stabilise SAA’s balance sheet.
- Restructure the company.
- Provide working capital.
- Build a stable platform for a new national airline.
“Different tranches of money will be required as different aspects of the restructuring takes effect,” the DPE said.
The DPE also noted that the restructuring of SAA would include 2,700 employees being issued with severance packages that meet the minimum requirements of the Labour Relations Act.
These packages also provide incentives to employees at the lower-end of the remuneration scale to ensure they are not worse-off.
Partnerships on the table
The department acknowledged the current conditions for the air travel industry, adding that it had not ruled out partnerships with other airlines.
“The DPE is cognizant that airlines across the world are in turmoil due to the COVID-19 pandemic,” the department said.
“There are possibilities for airline partnerships to improve the scale and scope of the aviation industry and ensure continuity of value creation to the South African economy.”
It added that it welcomed the attraction of a mix of local and international investor groups to provide the new SAA with technical, financial, and operational expertise.
This will ensure significant South African ownership whilst diversifying the investor base, the department said.
DPE WELCOMES COMMITMENT TO SOURCE FUNDING AND SUPPORT NEW SAA pic.twitter.com/HdMfVXlSIW
— DPE_ZA (@DPE_ZA) July 16, 2020
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