15 Jul South African Airways saved from collapse as creditors approve R26.7 billion rescue package
Creditors and unions have approved a business rescue plan (BRP) for South African Airways (SAA) that includes R26.7 billion in state funding and thousands of job losses.
The struggling national airline will continue operating as a significantly smaller company after 86% of voters supported the BRP, first proposed by administrators for the bankrupt carrier a month ago.
The motion overcame the 75% threshold after most labour groups agreed to improved severance packages last week, clearing the way for the workforce to be cut by almost 80% to 1,000 people.
SAA was placed into bankruptcy protection in December 2019 after surviving on bailouts and government debt guarantees for several years. The carrier was then hit with collapsing demand in March due to the COVID-19 pandemic.
South Africa’s Department of Public Enterprises said: “[It] applauds creditors and all stakeholders for realising that a new, restructured, competitive airline, born out of the old, is the best option to immediately take back to the skies and preserve the brand of a national carrier.”
However, the National Treasury will now need to allocate an additional R10 billion rand for SAA at a time when state finances are severely stretched by the COVID-induced economic downturn. The Treasury must provide a written commitment to provide the funding by Wednesday or the proposals will be deemed unimplementable.
The Department of Public Enterprises also announced that Philip Saunders will be the airline’s new interim chief executive. Saunders has been chief commercial officer at SAA since December 2019.