The business rescue practitioners of South African Airways say the airline cannot survive beyond month end, and the choices left are either a forced liquidation or a winding down process.
The BRPs said it is their view that these proposed actions “provide the most responsible way for a managed cessation of the operations of the airline and managing the risks of all affected parties”.
The practitioners do not have sufficient funds available to continue honouring the obligations of SAA to its employees beyond 30 April 2020.
Since government on 10 April has turned down a request for any further financial support for the business rescue process, the joint business rescue practitioners, Les Matuson and Siviwe Dongwana, said in a letter to affected parties on Thursday that only these two options remain.
During a meeting on Tuesday between government and some of the unions represented at SAA, it was again made clear that SAA can no longer depend on financial support from government.
“Given the fact that the practitioners have no further funding, the practitioners have considered whether they can develop a business rescue plan which secures a better return for SAA’s creditors than would result from its immediate liquidation,” states the letter.
This would entail a so-called winding down process with the aim of being able to provide severance packages for employees, undertaking the sale of certain assets and distributing the proceeds to affected parties.
This would depend on whether mutual consent can be reached. If this cannot be achieved, liquidation would be the only option.
Whether a winding down process can be undertaken depends on whether a deal is reached with employees in terms of a proposed termination of employment agreement of which the deadline for acceptance is on Friday.
The proposed agreement was issued to unions and non-union employees on 17 April. At this stage, requests made by the BRPs to government for the immediate funding of retrenchment packages, have not been successful.
SAA has been in voluntary business rescue since December last year. Post commencement funding received of R5.5 billion was fully drawn and utilised in March 2020, according to the BRPs.
Coronavirus curbing travel bans were implemented in SA on March 18. Since then SAA has mainly flown cargo flights and charter flights to repatriate stranded foreigners. There will be no more such charters after the end of April.
“The lockdown remains in place and SAA has no funds to continue trading and cannot pay a significant salary bill beyond April 2020,” state the BRPs.
The BRPs inivited employees and creditors to submit questions by Friday, 24 April and indicated that suitable arrangements will be made to consult in this regard on Tuesday, 28April 2020.
* This is a developing story. Keep checking in for updates.