SAA business rescue practitioners on leaked rescue plan: Various drafts doing the rounds

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The business rescue practitioners of South African Airways have shared a number of drafts of the business rescue plan to relevant stakeholders for comment during consultations, Fin24 was told on Wednesday evening.

This clarification followed an apparent leak of one of these drafts to the eNCA, which described four possible scenarios: two versions of restructuring, liquidation, or Mango only/ SAA closure.

It was not immediately clear which draft had been leaked. 

The BRPs, Siviwe Dongwana and Les Matuson, are still in the process of finalising the steps to implement the proposed restructuring option, as well as the anticipated effect the plan will have on stakeholders, including the estimated return to creditors.

Last week they announced that they had been granted a one-month extension by the majority of creditors to the end of March to publish their business rescue plan to save the embattled flag carrier from liquidation.

Still being finalised

The plan detailing the turnaround was set to be published before the end of February. It would have to be approved by creditors.

The BRPs believe that a further extension of one month will allow for sufficient time to finalise the plan, given the complexity and extent of engagement that is required in a business the size of SAA.

The airline was placed under business rescue in December and earlier in the month announced the cancellation of all its domestic routes apart from the popular Cape Town/ Johannesburg flight in an effort to save costs.

"As mentioned in the extention release, we will continue to engage with different stakeholders on the various drafts until we issue the final plan at end March," a spokesperson for the BRPs told Fin24.

Government role

Deputy President David Mabuza told Parliament on Tuesday that government had no intention of relinquishing ownership of SAA during the business rescue process, because "South Africans love the airline".

Speaking at News24's Frontline panel discussion on Thursday, Minister of Public Enterprises Pravin Gordhan said: "It's the business rescue practitioner's plan. We have no authority. We have a view, but it would be stupid to put forward a view that would lead to another collapse."

However, Mabuza was slightly more bullish about the shared long-term future of SAA and government as its owner, saying government would use the business rescue plan to inform that shared future.

On Monday the high court ruled that SAA is not compelled to transfer money it is holding on behalf of privately-owned regional airline Airlink. Airlink brought the application in order to recover funds from the sale of Airlink flight tickets. In terms of its long-standing franchise agreement with SAA, sales of tickets for travel on Airlink SA8-coded flights were processed by SAA's computer reservation system.

Revenue from these sales was meant to be ring-fenced and safeguarded until they were paid over to Airlink once the tickets had been flown. Airlink wanted the court to order SAA to pay up about R700 million. Airlink will either seek leave to appeal or try to recoup the revenue from SAA as a creditor.

Comair, which operates its own low-cost airline kulula.com as well as British Airways in South Africa, recently announced that its interim results where negatively impacted due to a breach of the contract by SAA relating to an outstanding amount of R790 million on a damages claim awarded to Comair. The future recoverability of the amount outstanding remains due to the outcome of SAA's business rescue attempt still being unclear.

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