The Department of Public Enterprises (DPE) has confirmed that the government will provide funding for South African Airways (SAA) to stave off looming liquidation.
SAA’s business rescue practitioners Siviwe Dongwana and Les Matuson had called a creditors’ meeting on Friday morning over concerns that government funding was not forthcoming.
However, the meeting lasted less than an hour after National Treasury reportedly provided a letter committing the government to providing R10.5 billion.
“The letter also articulates that the mechanisms and the timelines are yet to be finalised,” Dongwana reportedly told the meeting.
The National Union of Metalworkers of SA (NUMSA) and SA Cabin Crew Association (SACCA) had threatened legal action to force the government to provide funding and prevent SAA’s liquidation.
In a statement on Friday, DPE spokesperson Sam Mkokeli however said, “The DPE confirms that the government will reprioritise funds to finalise the restructuring of SAA and the implementation of the airline’s business rescue plan.
“An announcement to this effect will be announced in the Adjustments Appropriation Bill, which will be introduced in Parliament soon. The national carrier will not be liquidated.”
Govt to approach lending institutions
Mkokeli added that in the meantime, the government will approach lending institutions to finance the restructuring process and honour voluntary severance package commitments. This is because the restructuring process “should be brought closer to finalisation in the next few weeks.”
He said, “At the same time, the DPE will continue to assess the 20 unsolicited expressions of interest from private sector funders, private equity investors and partners for a future restructured SAA.”
The way forward would involve finalising the business rescue process, starting a restructured airline and appointing new non-executive directors and leadership team, DPE said.
The process would also involve “securing a credible strategic equity partner who can introduce the required technical, financial and operational expertise into the business.”
Unions however remained sceptical after Friday’s developments. “This [commitment] will mean something when there’s money in the bank,” NUMSA’s spokesperson Phakamile Hlubi-Majola said.