JOHANNESBURG - National carrier South African Airways said on Friday it was now officially under business rescue, a day after announcing that its board of directors had made the decision after consultations with the government as shareholder, in an effort to find a solution to its financial problems.
"The board of directors of SAA has announced that the notice of commencement of business rescue proceedings was filed with the Companies and Intellectual Property Commission (CIPC) on 5 December," it said in a statement.
"The company is officially in business rescue. The CIPC has processed the appointment of the business rescue practitioner, Mr Les Matuson from Matuson Associates in South African Airways' voluntary business rescue process."
On Thursday, public enterprises minister Pravin Gordhan said business rescue would allow SAA to continue operating in an orderly and safe manner and keep planes and passengers flying.
He said existing lenders would provide R2 billion as post commencement finance (PCF) guaranteed by the government and repayable out of future budget appropriations in order for the business rescue process to commence and enable SAA to continue operating. The government would provide an additional R2 billion of PCF in "a fiscally neutral manner".
An uncontrolled exit of SAA from the air transport industry would result in slowed or even negative economic growth if no contingency measures could be implemented, the Airlines Association of Southern Africa (AASA) has warned.
In a statement AASA, whose members include all of the domestic airlines in the country and most airlines in the Southern African Development Communit region and the Indian Ocean islands, said the business rescue should provide some security and clarity for South Africa’s air transport, trade, logistics, travel and tourism sectors.
"While AASA may not comment on SAA’s business or its shareholder’s decision, it is important to consider them within the industry and broader socio-economic contexts within which the sector subsists," it said, noting that South Africa’s domestic air transport market was one of the most robustly competitive in Africa and benefited the entire economy by providing choice, affordable, safe and reliable connectivity to destinations and markets throughout the country, while reducing the cost of travel and doing business.
"It is a situation AASA, its members and crucially, their customers - and presumably also government - would prefer to see maintained," it added, warning:
"The net effect of any uncontrolled SAA exit, against which the air transport and tourism industries are unable to implement contingency plans, would be slowed, or even negative, economic growth, which will compound fiscal shrinkage."