South African Airways’ Business Rescue Practitioners (BRPs) say they have taken a decision to suspend all airline operations with immediate effect, while they wait for an outcome to the group’s funding issues.
The administrators said on Tuesday (29 September) that, while progress has been made to source funding for the group’s rescue plan, until the issue has been resolved, the group needs to look at other options.
“There has been certain progress throughout the previous week in relation to the securing of funding for the implementation of the Business Rescue Plan, subject to certain terms and conditions,” the BRPs said.
They noted that certain funders have indicated a willingness to provide a portion of the funding required for the implementation of the Business Rescue Plan, and they are engaging with government in relation to the securing of the remaining funding that is required to fully implement the plan.
The implications for the business if it only receives a portion of the required funding is also being discussed.
The BRPs indicated that they needed time to assess and determine the appropriate way to proceed in the absence of funding, and for this, they are mulling the sale of the business and/or assets of the company and its liquidation.
“We will be able to make that determination and conclude those details in the following week,” they said.
In the interim, however, the BRPs have made a decision to suspend all the airline operations with immediate effect – and are pursuing a process to put the airline under care and maintenance until funding discussions are completed.
“We will continue to keep affected persons fully informed as to the progress of these matters and how this will impact on the business rescue proceedings,” the BRPs said.
Bloomberg reports that National Treasury wants strict conditions attached to any guarantees it provides for loans to the country’s embattled state airline, according to two people familiar with the matter.
Treasury and Department of Public Enterprises officials met Saturday to discuss ways to restart South African Airways, the people said, asking not to be identified because the talks are private. Representatives of two South African banks attended the talks, they said.
SAA halted operations and sought bankruptcy protection in December. The carrier’s administrators say R10.5 billion is needed for the airline to resume operations.
Finance minister Tito Mboweni is prepared to provide guarantees on R4 billion to R5 billion of that amount, subject to stringent criteria, the people said.
It’s unclear where the funding would be sourced from and there’s no agreement yet on any bailout, the people said. President Cyril Ramaphosa has backed the airline’s rescue, they said.
Originally published on BusinessTech – https://bit.ly/3ifnhKx