South Africa Commits to Provide SAA Funding, Administrators Say
South Africa Commits to Provide SAA Funding, Administrators Say
(Bloomberg) -- The administrators of South African Airways remain in the dark about when the funds the government said it will provide to restart the insolvent national carrier will land.
“This morning, government sent a letter to the business rescue practitioners saying that National Treasury and the cabinet had committed to providing 10.5 billion rand ($650 million) in funding for SAA,” but no time-frame was given, Louise Brugman, the administrators’ spokeswoman, said by phone from Johannesburg on Friday. “The timelines are critical for the decision on whether SAA is liquidated, wound up as a going concern or is able to continue to trade.”
SAA has been in administration since December. The airline has long been a drain on state finances, relying on bailouts and other assistance since last making a profit almost a decade ago.
“The 2020 budget said that the money for restructuring costs will be found through a reprioritization process,” Public Enterprises Minister Pravin Gordhan, who has been championing efforts to save SAA, said in a text message. “That will be sorted out next week.”
Finance Minister Tito Mboweni has previously indicated the government doesn’t have the money available to rescue SAA and said that he would help “mobilize” funds from other sources. The Treasury, which is due to release its medium-term budget framework next month, didn’t immediately respond to a request for comment.
“The national carrier will not be liquidated,” the Department of Public Enterprises said in a statement. “Because the restructuring process should be brought closer to finalization in the next few weeks, lending institutions will be requested to finance the restructuring process and honor commitments for voluntary severance packages and retrenchments.”
Twenty private-sector funders, private-equity investors and partners have submitted unsolicited expressions of interest in a restructured SAA, and those are being assessed, the department said.
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