SAA rolls out of bankruptcy protection for capital deal

South African Airways (SA, Johannesburg OR Tambo) left bankruptcy protection, its directors declaring it “both solvent and liquid” and “sufficiently prepared to continue into the future”. In addition, its sole shareholder, the South African government, is set to close an agreement with a strategic equity partner “in the coming weeks”.

This follows the filing on April 30, 2021 of a “Notice of Substantial Implementation” of the SAA Business Rescue Plan with the South African Corporations and Intellectual Property Commission (CPIC) by the Joint Practitioners of the SAA. Business Rescue (BRP), Siviwe Dongwana and Les Mathuson.

“The filing of the Substantial Implementation Notice means that the BRPs have effectively unloaded the company’s rescue and handed over SAA operations to its board of directors and management team with immediate effect,” they said. they announced in a statement.

“A significant portion of the debt that blocked the SAA has since been compromised and the balance of it transferred to receivership, a vehicle specifically intended to ensure the payment of the debt over the next three years,” said they stated. Dongwana and Bongani Nkasana, a Johannesburg-based chartered accountant, have been appointed SAA receivers. They will be responsible for distributing what is owed to creditors and note holders over the next three years.

At the same time, the government’s efforts to find a strategic partner for SAA are being finalized, according to a statement from the Department of Public Enterprises (DPE).

He said the interim SAA board and management would develop and implement “an interim business plan to support operations while a strategic partnership in actions (SEP) is being finalized.” “The government is in the final stages of negotiations with the preferred SEP, and a buy and sell agreement is expected to be reached in the coming weeks. This will provide capital and technical and commercial expertise essential to guarantee the emergence of a competitive national carrier, ”he said.

“The interim board of SAA is responsible for overseeing the strategic, financial and operational management of the subsidiaries of SAA, South African Airways Technical (SAAT), Airchefs and Mango Airlines (JE, Johannesburg OR Tambo) and ensuring their commercial sustainability. These subsidiaries will need to be restructured and in some cases the case for continued existence needs to be assessed, ”he said.

Mango was grounded on April 28, 2021 by the Airports Company South Africa (ACSA) for unpaid passenger service charges, landing fees and parking. The Mango and SAA boards of directors have called for the low-cost carrier to be placed in the business bailout from May 1 through July 2021, or until it receives state funding. However, the company said in a brief statement at the end of April 30 that “Mango Airlines will continue to operate normally tomorrow, Saturday May 1, 2021 and beyond, with the exception of Zanzibar at this point. We will notify the public the next week on this road “. According to ADS-B data from FlightRadar24, only one of the airline’s fourteen B737-800s, the ZS-SJA (msn 29248), was operating on May 1 between Johannesburg OR Tambo, Cape Town, Durban King Shaka and Port Elizabeth. . Meanwhile, Mango’s ZS-SJF (msn 3006) appears to have been returned to lessor Macquarie AirFinance, with the plane flown from Johnnesburg via Addis Ababa to Budapest between April 29 and April 30, 2021, the data revealed. by FlightRadar24 ADS-B.

Although SAA’s rescue activity did not extend to its subsidiaries, the DPE attempted to embezzle ZAR 2.7 billion (USD 189 million) for the subsidiaries, which led to legal challenges from the companies. SAA unions.

The interim SAA board and management team face ongoing legal issues, including ongoing disputes with unions and the SAA Pilots Association (SAAPA), whose members are still excluded of the company. The SAA and the pilots disagree on various terms of settlement, including a “regulatory agreement” whereby pilots can effectively prevent the board and management from leasing manned aircraft without SAAPA’s consent.

The SAA business bailout lasted 17 months and began on December 5, 2019. On July 24, 2020, creditors approved a business bailout package that required ZAR 10.3 billion ($ 710 million) to complete. its implementation. With the South African Treasury refusing to provide another state bailout for the national carrier, SAA was left in limbo, having to put its remaining A340 fleet on hold. The company struggled for three months in 2020 to secure financing from lenders despite a state guarantee of ZAR 2 billion (USD 138 million). It was not until October 2020 that the government allocated ZAR 10.5 billion (USD 724 million) for the implementation of the plan by allocating funds to other departments of the state. Of this amount, ZAR 7.8 billion (USD 538 million) was received in February 2021.

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