Government has agreed to fund a restructuring of South African Airways (SAA), if a business rescue plan for the struggling state-owned airline is adopted, a copy of the draft plan showed on Monday.
SAA entered business rescue — a local form of bankruptcy protection — in December, after which administrators took over the running of the airline and have been working on a plan to save the business.
The draft plan seen by Reuters said the government had agreed to make a working capital injection, which the administrators estimated at not less than R2 billion ($114.86 million), fund employee layoffs, which could cost up to R2 billion, and make an allocation of at least R600 million towards the repayment of general concurrent creditors.
That is on top of R16.4 billion that the government already set aside in its February budget to repay SAA's guaranteed debt and cover debt-service costs.
Government agrees to fund SAA rescue, draft plan says
Government has agreed to fund a restructuring of South African Airways (SAA), if a business rescue plan for the struggling state-owned airline is adopted, a copy of the draft plan showed on Monday.
SAA entered business rescue — a local form of bankruptcy protection — in December, after which administrators took over the running of the airline and have been working on a plan to save the business.
The draft plan seen by Reuters said the government had agreed to make a working capital injection, which the administrators estimated at not less than R2 billion ($114.86 million), fund employee layoffs, which could cost up to R2 billion, and make an allocation of at least R600 million towards the repayment of general concurrent creditors.
That is on top of R16.4 billion that the government already set aside in its February budget to repay SAA's guaranteed debt and cover debt-service costs.
A spokesperson for the administrators confirmed the draft plan was genuine but said: “It would be irresponsible to comment on the draft plan which was leaked to the media. It is for discussion purposes only, and we await comment from the affected persons.”
A spokesperson for the department of public enterprises, the ministry responsible for SAA, did not immediately respond to a request for comment.
State-owned SAA has not made a profit since 2011 and has received more than 20 billion rand in bailouts in the past three years.
The government said in April that it would not provide further funding for rescue efforts, pushing the business to the brink of collapse. But in recent weeks officials have stepped up pressure on the administrators to come up with a plan to salvage SAA.