The South African government has provided its commitment to support and source the funding of R10.3 billion needed to restructure South African Airways (SAA).
A letter of support, in which government makes this commitment to raise the requisite funding was signed by both the Minister of Finance Tito Mboweni and the Minister of Public Enterprises Pravin Gordhan on July 15, the deadline set in the business rescue plan.
Government has committed to mobilising funding for the “short, medium and long term requirements to create a viable and sustainable national airline”.
The commitment comes after 86% of SAA creditors voted in favour of the final rescue plan that is aimed at “attaining a financially and commercially sustainable and viable airline, and minimising the negative social impact of the restructure,” as director-general Kgathatso Tlhakudi said to creditors on Tuesday.
“The DPE is cognisant that airlines across the world are in turmoil due to the COVID-19 pandemic,” it said in a statement welcoming Treasury’s commitment.
“There are possibilities for airline partnerships to improve scale and scope and ensure continuity of value creation to the South African economy and long-term sustainability of the aviation industry. These are possibilities the government is exploring, including broader private sector participation.”
Thlakudi, who has previously mentioned that government is not “obsessed with control” in the new carrier, told creditors that the government is in the process of appointing a transaction advisor to help finalise initial engagements its had with potential investors.
“While maintaining a certain level of presence in the ownership of the new carrier, 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 South African ownership whilst diversifying the investor base”.
The restructuring of the airline will include severance packages for over 2 700 workers who will receive voluntary severance pay totalling R2.2 billion.
All employees, including their unions, have to reach an agreement on the reduction of employee numbers by July 17 failing which a section 189 process will be initiated by the rescue practitioners by July 22.