DPE starts SAA rescue plan… without the R10.3bn needed to do it

SAA and other airlines' planes. Picture: EPA/Udo Weitz

Four local banks are already owed a total of R16.4 billion for loans to SAA, and an SAA executive said no other funding has yet been found.

The Pravin Gordhan-led department of public enterprises (DPE) says it is working hard at implementing South African Airways’ rescue plan but it gives no indication of funding having been obtained yet.

Creditors of the long-struggling airline approved the rescue plan on July 27. Since then there has been no word on where the about R10.3 billion will come from to implement it. According to a statement from the department, it has been working with stakeholders “around the clock” to bring the process closer to finalisation.

An SAA executive told union representatives at a meeting on Tuesday that no funding for SAA has as yet been found.

To complete the rescue process – which is still in the hands of the rescue practitioners – the DPE says it is overseeing four phases of the project. The first phase would be the restructuring of the airline, including the implementation of voluntary severance packages. The appointment of non-executive directors and a new management team would be the next phase. Philip Saunders, SAA’s chief commercial officer has already been appointed as acting CEO.

Thirdly, transaction advisors would have to be appointed and lastly the formation of “a customer centric airline designed to be lean, technologically capable, digitally modernised and agile to service all market segments”.

ALSO READ: DPE’s plan for SAA will see all employees retrenched with only 1,000 remaining

The mandate of the transaction advisor would be to assist the department in transaction planning, feasibility analysis, procurement and implementation of transactions and raising funds and investments for the new airline.

The rescue plan foresees that only 1 000 employees of the almost 5 000 would remain once the voluntary retrenchments and section 189 retrenchment processes are complete. They would be working under different terms and condition at the new airline.

A further about 1 000 employees will be placed on a temporary training lay-off scheme so that they can be absorbed into the new airline as and when new positions become available.

“The DPE welcomes the attraction of a mix of local and international investor groups to provide the new airline with technical, financial and operational expertise to ensure significant SA ownership whilst diversifying the investor base,” the DPE stated on Wednesday.

The DPE indicated it will maintain “a certain level of presence” in the ownership of the new airline. It would like to see the airline being used to connect Africa to the rest of the world as a competitive, viable and sustainable national airline for SA.

Fin24 has heard from a reliable source that the DPE has approached various aircraft manufacturers requesting proposals for a fleet for the new airline. The source also says local banks appear to be reluctant to lend SAA more money. Four local banks are already owed a total of R16.4 billion for loans to SAA. This has been guaranteed by government.

DPE has been approached for comment regarding it approaching the manufacturers as well as whether local banks will lend more, but at the time of publication no response had been received.

The rescue practitioners said they have no comment at this stage.

Mashudu Raphetha, president of the National Transport Movement says he welcomes the good news that the DPE as shareholder of SAA is currently finalising the appointment of the board.

“The number of staff opting for voluntary severance packages is encouraging and we don’t see any possibility of delaying SAA touching the skies,” he said.

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