The South African government has ruled out the option of selling off South African Airways (SAA). This was revealed in a letter to the administrators of the airline in which it committed to provide SAA with 10.5 billion rand ($650 million) of funds.
The administrator told an SAA creditor meeting that the government’s communication had the support of the National Treasury but the timelines and mechanisms for the funding were yet to be finalized.
“Because the restructuring process should be brought closer to finalisation in the next few weeks, lending institutions will be requested to finance the restructuring process and honour commitments for voluntary severance packages and retrenchments. At the same time the DPE will continue to assess the 20 unsolicited expressions of interests from private sector funders, private equity investors and partners for a future restructured SAA.
“The Department of Public Enterprises is sympathetic to the plight of SAA employees while continuing to work with other government departments, including the National Treasury, to make sure that the airline’s restructuring plan will be successfully implemented.”
The administrators took control of SAA in December after almost a decade of financial losses and published a rescue plan for the airline in June following repeated delays and wrangling over its future.
But the plan, which envisages scaling back SAA’s fleet and cutting jobs, needs at least 10 billion rand to work, and the cash has not materialized since July when creditors approved the restructuring plan.
The Department of Public Enterprises, the government agency responsible for SAA, said on Thursday that it was still trying to source the necessary funding and that it was assessing proposals from several potential strategic equity partners.