The road to a new South African Airways (SAA) will cost the government an estimated R21 billion, according to a leaked draft business rescue plan compiled by rescue practitioners Siviwe Dongwana and Les Matuson.
The document was released to creditors, employees and the Department of Public Enterprises for consultation.
Matuson and Dongwana have noted the media leak, cautioning against the interpretation of the proposed R21 billion plan as being set in stone. On Monday the practitioners were granted an extension to publish their final plan on June 8.
“Given that, it is a draft and has not received agreement or comment from any of the relevant affected persons we will not comment on the leaked draft to the media and will await input from the affected parties as is prescribed by the Companies Act,” Matuson and Dongwana said in a statement.
“To assume and comment on this draft as if it is the final version would be very irresponsible.”
“The extension will not stop the practitioners from continuing to take the necessary steps to progress SAA’s business rescue and will continue to take proactive steps to conserve cash and protect the interests of SAA”, concluded the BRPs.
According to the plan, the airline’s restructuring will require an initial capital injection of R2 billion.
Employee retrenchments packages are expected to come in at another R2 billion but this would not have to be paid immediately, with the rescue practitioners saying arrangements will be made with employees to defer the payment until the government provides an appropriation for the amount, or a strategic equity partner provides a cash injection to cover it.
An amount of R16.4 billion will go towards payment of SAA’s lenders and a minimum of R600 million will be needed to pay the general concurrent creditors.
Should this rescue plan be adopted government’s commitmet to SAA and the new airline will amount to R21 billion of which R16.4 billion was already appropriated in the February budget for historic debt.
In a statement released on Thursday, the DPE the government has not discussed the plan or taken any decisions on the proposals.
“The government has embraced the restructuring process as part of a path to a new, dynamic and financially viable airline that will serve South Africa’s economic and strategic interests,” said the department.
“We will review the Plan, explore various funding options, and communicate our decisions in due course.”
The airline, which last made a profit in 2011, has been in business rescue since December 2019. Since 2003 it has received over R31 billion in government bailouts and its recently-released financial statements reveal that SAA has made losses of R10.4 billion in the past two years.