A draft new South African Airways (SAA) Business Rescue Plan, prepared by Business Rescue Practitioners (BRPs) Siviwe Dongwana and Les Matuson; and seen by the Democratic Alliance (DA), reveals that the government has agreed to a new R21 billion bailout for SAA.
The draft business rescue plan can be accessed here.
This proposal is part of a plan for a re-imagined ‘new airline’ that is to be established as a state-owned company by the government in terms of the proposed restructure.
According to the draft business rescue plan, “government has agreed to” provide funding for the following:
|Working capital injection to restart the airline post Covid-19||2|
|Retrenchment of Employees||2|
|Payment of Lenders||16, 4|
|Payment of the General Concurrent Creditors||0,6|
The draft business rescue plan envisages the “new SAA” to fall under a new holding company called “New HoldCo” which shall also oversee SAA City Centre (SACC), SAA Technical, Air Chefs, and Mango airlines.
Renewed plans by the BRPs calling for the establishment of a new airline are hardly surprising. It follows a spirited political campaign by Gordhan to discredit the business rescue process and resurrect the folly of failure by calling for the establishment of a new state airline.
That the BRPs are now singing from the same hymn book as Gordhan clearly shows that the minister has hijacked the process.
If this draft business rescue plan is approved in its current form, SAA will continue to be a fiscal blackhole for years to come. The BRPs are projecting that the “new SAA” will trade at massive losses totalling R 19,9 billion for the first three years:
- Year 1 – R8,1 billion loss
- Year 2 – R7,5 billion loss
- Year 3 – R4,3 billion loss
These losses exclude trading losses by Mango, SAA Technical, Air Chefs, and SACC subsidiaries which are also likely to rake up tens of thousands or even billions of rands in losses.
The insanity that is the “rescue” of SAA, on the basis laid out by the BRPs, should not be given any serious consideration. The only credible course of action for the BRPs is to apply to court for the liquidation of SAA as is required by Section 81 of the Companies Act.