The South African Airways (SAA) Business Rescue Practitioners (BRP) and the airline’s creditors will on Friday hold an urgent meeting following government’s failed promise to provide the R10 billion bailout funding needed for the restructuring of SAA and the implementation of its business rescue plan.
In a statement issued on Thursday, the BRPs said Friday’s meeting would be used to plot the way forward to possibly avoid the liquidation of the national carrier.
“The BRPs hereby advise affected persons that the anticipated funding has not been received by the company in accordance with the commitment from government to provide the funding for the restructuring of the company and the implementation of its business rescue plan.
“Accordingly, a meeting of creditors will be convened on September 18 at 11am to engage with affected persons on this issue and the proposed future of the company taking into account all relevant factors,” the statement reads.
The DA’s Alf Lees, a member of the Standing Committee on Public Accounts, said the promises made to SAA creditors on July 14 by Pravin Gordhan, the Minister of Public Enterprises and Tito Mboweni, the Minister of Finance, that the additional funding of R10.4 billion over and above the R16.2 billion taxpayer bailout already budgeted for was wishful thinking.
“They have not been able to find any suckers willing to provide the R10.4 billion funding required to attempt the resuscitation of the ‘dead duck’ SAA.
“Pravin and Tito would seem to have only one option left to them and that is to include a further taxpayer bailout in the Medium-Term Budget Policy Statement (MTBPS) in October 2020,” said Lees.
He said that the Department of Public Enterprises had made a formal application to National Treasury for the R10.4 billion required to bailout SAA. The funding has not materialised and more negotiations with the creditors are likely to take place tomorrow in order to buy time.
Lees predicted that the Gordhan, at the last hour, would make a plea to the creditors to extend the life of the Business Rescue Plan.
“Before the creditors make any decisions on Friday, Pravin will make a plea to the creditors to extend the life of the business rescue plan to about October 21, the date of the MTBPS.
“This request will probably be motivated on the basis that negotiations with funders are at an advanced stage without divulging that the funders will yet again be taxpayers,” he said.
Lees added that since the creditors had nothing to lose and some, such as the employees have everything to gain, the creditors would most probably agree to a further extension.
He said this would have further consequences for taxpayers because they will have to fork out the money to bail out SAA.
“Tito and National Treasury have not agreed to this taxpayer bailout being included in the Medium-Term Budget Adjustments. The ANC will instruct Tito Mboweni to include the R10.4 billion bailout in the MTBPS and Mboweni will have no option but to capitulate,” said Lees.
He said the ruling party would ensure that taxpayers were burdened with increased sovereign borrowings and associated interest costs to pay back which will hurt the taxpayer’s pocket.