Photo by: Reuters
The Ministry of Public Enterprises on Sunday assured the country that it was in discussions with National Treasury regarding the provision, to State-owned company South African Airways (SAA), of R2-billion in post commencement finance (PCF), to help underpin the airline’s current business rescue process. At the start of business rescue for SAA, the airline’s lenders provided R2-billion in PCF, with the Government committing to contribute another R2-billion, which has, however, not yet been provided.
And on Monday SAA itself issued an assurance that its “flights to all its destinations continue as normal” and that it would transparently communicate with its customers and all other stakeholders about any “material or significant operational changes” that could affect its flight schedules. This followed media reports that the airline might cease operating.
In its statement, the Ministry also assured that “[w]e are determined to break with the past patterns of bailouts as these have become a moral hazard. The Business Rescue process is unprecedented at this level and fashion, and in the public sector. It is a decisive move that demonstrates that Government will undertake the necessary bold steps in order to reposition its assets in such a way that they do not continue to depend on the Fiscus and thereby burden taxpayers.”
The Ministry also affirmed that it was “determined” to make a contribution to the SAA’s business rescue, to keep job losses at a minimum and to allow the creation of a “rejuvenated” airline. The Government’s aim was to establish a competitive, efficient and sustainable airline which would have a strategic equity partner.
In turn, the new SAA would be able to bring millions more tourists into the country. This would help to create more employment in the tourism and related sectors of the economy. The airline would also be able, in conjunction with other African airlines, to assist and strengthen intra-African integration, trade and travel.
SAA was placed in business rescue in early December. This has allowed the airline to continue with its operations, safely, under the authority of a business rescue practitioner. The Government sought an “orderly and methodical restructuring” of SAA, as one of its “top priorities”.
The Ministry thanked the people of South Africa, and SAA’s “investors”, suppliers and customers for “their understanding and patience” during this process. “Collective effort is needed to make SAA as [sic] a premier African airline and Star [airline] Alliance member”.