- An important deadline looms for SAA this Wednesday, 22 July.
- The rescue plan stipulates that all conditions to be able to implement it, must be fulfilled by this date.
- If not all conditions are met, the plan could be deemed "unimplementable", and the practitioners might have to "discharge" the rescue.
An important deadline looms for South African Airways this Wednesday, 22 July.
The practitioners have made it clear to affected parties that, if all conditions to be able to implement the rescue plan creditors accepted are not fulfilled by 22 July, the plan will be deemed "unimplementable".
Then a meeting of creditors will be convened on 24 July for creditors to consider amending the plan, the practitioners said in their latest communication to affected parties last week. Affected parties include government as shareholder, employees and creditors.
Conditions that still have to be met include determining the amount of voluntary severance packages; who will be retrenched in terms of the Section 189 labour law process; and what the terms and conditions for those remaining in employment will be.
The Section 189 process has, however, begun.
Last week the Department of Public Enterprises and Treasury provided the practitioners with a requested letter of commitment regarding funding for the proposed rescue plan and restructure of SAA. It was signed by Minister of Public Enterprises Pravin Gordhan as well as Finance Minister Tito Mboweni.
The letter did not mention any amounts nor the source of the funding and only indicated a commitment to "mobilise" funding required. It is expected that the practitioners will likely indicate on 23 July whether the letter was acceptable in terms of the conditions required to make the implementation of the plan possible.
SAA has been bailed out to the tune of about R30 billion over the past 10 years. In terms of the rescue plan, about R10.3 billion in additional funding would be needed. This is apart from government guaranteed loans totaling about R16.4 billion held by four private banks. Money for the guaranteed loans have been allocated in prior budgets and intended to be paid over a three-year period.
The DA announced last week that it filed an urgent interdict application at the North Gauteng Division of the High Court to prevent any money for SAA coming from "emergency" funding. The Public Finance Management Act (PFMA) gives Mboweni "emergency" powers to spend money not budgeted for in "exceptional" and "unforeseen" circumstances.
If all the conditions are not met and the creditors do not accept amending the plan, the rescue practitioners might have no other option than to "discharge" the business rescue, which could mean no alternative remains than SAA going into liquidation.
On the weekend, Gordhan said during an interview on eNCA that the government has to determine how SAA's rescue will be funded. It followed on a tweet by Mboweni which seemed to deny Treasury planning to bail out SAA.