South African Airways (SAA) has announced that it is entering “business rescue,” a process that the airline describes as very similar to Chapter 11 bankruptcy laws in the United States. The airline says that its Board of Directors and its shareholder, the Department of Public Enterprise within the South African Government, made the decision due to current financial conditions.
SAA says that business rescue will allow it to restructure its debt, reduce costs and continue to operate on a regular basis. The airline says that it intends to continue to operate a normal flight schedule during the process, and that its sister carrier, Mango Airlines, South African Express and Airlink, are not affected by SAA’s business rescue, and that they will continue to operate as normal.
“We recognize that this business rescue process presents many challenges and uncertainties for our valued customers, travel advisors and business partners,” the airline said in a statement announcing the decision, promising that any changes will be communicated to travel advisors “as soon as possible.” The airline also said that it will endeavor to operate a provisional timetable, with details to be published shortly.
“The considered and unanimous conclusion has been to place the company into business rescue in order to create a better return for the company’s creditors and shareholders, than would result from any other available solution,” the airline said. “Furthermore, the company is seeking to minimize the destruction of value across its subsidiaries and provide the best prospects for selected activities within the group to continue operating successfully.”
The airline also promised to “engage in targeted communication and support for all employees groups at this difficult time.”
The Board of Directors will also announce the appointment of business practitioners in the near future.