SAA gets an extension to keep flying its international routes
This as the majority of creditors and lenders granted approval to the business rescue practitioners (BRPs) of the cash-strapped airline to extend the publication of their business rescue plan by a month to the end of March.
Louise Brugman, a spokesperson for the rescuers, said on Friday that SAA would extend operating in Germany and Brazil for a few weeks. “Munich has been extended to April 21; São Paulo has been extended to March 31 to cover the carnival in Rio,” she said.
However, the rescuers did not review their controversial decision to cease operations on the various domestic route networks, save for Cape Town on a reduced basis.
Earlier in February, SAA rescuers Les Matuson and Siviwe Dongwana announced the closure of several regional and international services from Johannesburg to turn towards profitability.
The rescuers said they were in the process of finalisation of the proposed restructuring plan and the steps required to implement it.
“We are still in the process of finalising the steps to implement the proposed restructuring option as well as the anticipated effect the plan will have on stakeholders, including the estimated return to creditors,” the rescuers said.
“We believe that a further extension of one month will allow for sufficient time for us to finalise the draft plan, given the complexity and extent of engagement that is required in a business of this size.”
They said the employees committee, creditors committee and the Department of Public Enterprises would be provided with an opportunity to make representations to the practitioners regarding the draft Business Rescue Plan and make representations.
The final draft of the business rescue plan would be published and be voted on by creditors after the rescuers have considered and discussed representations.
The meeting of creditors would be convened within 10 days of the date of the publication of the plan.
Alf Lees, DA spokesperson on public accounts, however, called the entire business rescue process “a farce”.
The DA had called on the creditors and the lenders to reject the rescuers request for extension to submit their proposed rescue plan.
“The complete lack of any urgency on the part of creditors and lenders to get the business rescue plan under way is a clear indication that they feel assured that they will get their money and that the entire business rescue process is a farce,” Lees said.
SAA was last week allocated R16.4billion to settle guaranteed debt and interest over the medium term as it was placed under business rescue in December due to its liquidity crisis.
At the end of January, SAA rescuers secured R3.5bn in funding from the Development Bank of Southern Africa and immediately drew down R2bn of the facility.
Labour law expert Michael Bagraim of Bagraims Attorneys said it did not make sense for the airline to keep getting cash injections when a rescue plan had not been finalised and approved.
Bagraim said the creditors and lenders showed that they wanted the R16bn government allocation distributed before the courts could step in, in case the rescue plan recommends liquidation.
“The problem in this regard is that they are going (for approval) to the very people who are going to benefit from the money that the government gave them.
"It’s like asking six wolves and a sheep at a dinner table what we should have for lunch,” he said.
“It’s so obvious what is going on here, and it is absolutely wrong. I’ve never heard of it. SAA is overstaffed but they will carry on spending on exactly the same basis. The money is going to be spread out to the creditors, the lenders and to the staff and we are back to square one.”
But Tshepiso Moahloli, the acting head of asset liability and management at the National Treasury, last week defended the government's decision to allocate billions of rand to SAA, saying creditors wanted to be paid back with interest.
“SAA had legacy debt. This debt is old, it’s not new. It’s been sitting in their books,” Moahloli told Parliament.