South African Airways (SAA) has released an update on its business rescue plan. The airline reports that it, along with the Departments of Public Enterprises and National Treasury, has been successful in obtaining the balance of the post-commencement funding required to meet the short-term liquidity requirements of the airline for the period until the business rescue plan is published and adopted.
SAA filed for business rescue, a process that is very similar to Chapter 11 bankruptcy laws in the United States, in early December 2019. At that time local commercial banks provided the initial post-commencement funding of R2 billion (approximately $137 million), in addition to the existing exposures to SAA. Now the airline reports that the Development Bank of Southern Africa has offered to provide the next portion of funding for a total amount of R3.5 billion (approximately $240 million), with an immediate draw-down of R2 billion. The airline also said that funding for the restructuring phase after the rescue plan is adopted is being considered by potential funders.
“The restructuring of SAA will provide an opportunity to develop a sustainable, competitive and efficient airline with a strategic equity partner remaining the objective of government through this exercise and will result in the preservation of jobs wherever possible,” the airline said in a written statement. “SAA is a key strategic asset which needs to be positioned to provide reliable connectivity to markets within South Africa, the African continent as well as servicing selected international routes.”
Previously, the airline had said that it would continue to operate a regular flight schedule throughout the business rescue process. Its sister carrier, Mango Airlines, South African Express and Airlink, are not affected by the plan and will continue to operate as normal.