SAA rescue plan accepted, DPE undertakes to provide proof of funding

A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
Silas Stein/picture alliance via Getty Images
  • A majority of SAA's creditors have voted to adopt the airline's proposed business plan. 
  • In terms of legislation this means the plan may be implemented, subject to funding obtained. 
  • The vote to adopt the rescue plan gives the national carrier a chance to avoid liquidation.


The creditors of South African Airways on Tuesday voted to adopt the airline's proposed business rescue plan, which would require government or a strategic equity partner to provide an additional R16.3 billion in funding.

In terms of the voting apportionment allocated to creditors by the rescue practitioners according to the sum of their claims against the airline, there was an 86% vote in favour of accepting the rescue plan.

In terms of the Companies Act, this means the proposed rescue plan may be implemented, subject to funding obtained. The DPE has informed the rescue practitioners that it will provide a letter stipulating the funding received in time for a deadline of 15 July.

The vote to adopt the rescue plan gives the 86-year-old national carrier a chance to avoid liquidation. Finance Minister Tito Mboweni did not allocate any additional funds for SAA in his supplementary budget announced at the end of June.

'New SAA'

Just before the creditors voted, Kgathatso Tlhakudi, acting director general of the department of public enterprises, addressed the meeting to say that government supports restructuring SAA into a commercially sustainable airline, while minimising the impact of the airline's restructure on job losses. In his view, the airline that will emerge from the restructure process will be an attractive asset for an equity partner.

He also said the department will be announcing an interim board of the "new SAA" soon. The interim CEO for the airline will be Phillip Saunders, currently SAA's chief commercial officer. Tlhakudi said Saunders has a credible track record of leading airlines around the world.

The national airline went into business rescue in December last year. Its financial losses totalled more than R10 billion over the past two years. Over the past decade, government has had to bail it out with almost R30 billion. 

ZAR/USD
17.51
(-0.68)
ZAR/GBP
22.98
(-0.40)
ZAR/EUR
20.74
(-0.22)
ZAR/AUD
12.62
(-0.19)
ZAR/JPY
0.17
(-0.53)
Gold
2059.22
(-0.47)
Silver
28.37
(-4.65)
Platinum
971.00
(-2.70)
Brent Crude
45.10
(-0.18)
Palladium
2199.50
(-0.71)
All Share
57656.69
(+0.05)
Top 40
53350.88
(+0.13)
Financial 15
9888.41
(-0.41)
Industrial 25
76178.50
(+0.02)
Resource 10
60086.05
(+0.49)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 913 votes
It depends on how the funds are used.
74% - 6077 votes
No. We should have gotten the loan elsewhere.
15% - 1242 votes
Vote