The Department of Public Enterprises has welcomed the notice of substantial implementation filed by the Business Rescue Practitioners (BRP), which signals the exit of the BRPs at South African Airways (SAA) since the process started in December 2019.
“The business rescue process enabled the restructuring of SAA, reducing its cost base and its financial liabilities, creating a sustainable baseline going into the future. The BRPs are handing over to the SAA Interim Board a solvent business,” the department said in a statement.
However, the department warned that this does not mean the work is done.
It said the board and management will be developing and implementing an interim business plan to sustain operations, while a strategic equity partnership is being finalised.
The department said government is in the final stages of negotiations with the preferred strategic equity partner (SEP), and a purchase and sale agreement should be concluded in the next few weeks.
This will enable capital, and much-needed technical and commercial expertise to be brought in to ensure a competitive flag carrier emerges, the department said.
“In the BR plan, there are liabilities that will be settled over the next three years. These are concurrent creditors and unflown ticket liability. The BRPs and the Creditors have agreed to set up a receivership to manage the settling of these outstanding liabilities meaning that SAA will be relieved of the responsibility.
“The Interim Board of SAA is mandated to oversee the strategic, financial and operational management of the subsidiaries of SAA, South African Airways Technical (SAAT), Airchefs and Mango SOC Ltd, and ensure their commercial sustainability. These subsidiaries will need to be restructured and in some instances, the case for continued existence must be assessed,” the department explained.
The department said the board and management team will deal with all other residual legal matters, including the Labour Relations Act Section 189s, and the legal disputes in the courts with the labour unions and the pilots association.