About 15 months after SAA went into business rescue, the saga seems to be drawing to a close, with its business rescue practitioners saying on Friday they hope to complete the process and hand the airline back to its interim board by the end of this month.
The question that remains unanswered is when a CEO and commercial director will be appointed to drive the airline's re-launch. The group’s acting CEO, Zuks Ramasia, took early retirement in April 2020 after assuming the role in June 2019 following the resignation of Vuyani Jarana. SAA’s commercial director, Philip Saunders, left the group in December 2020.
Asked for comment about the appointment of a CEO and commercial director for SAA, joint business rescue practitioners Siviwe Dongwana and Les Matuson said it was never their role to appoint executive management.
The department of public enterprises said the interim board had been tasked with ensuring that an experienced management team with the requisite expertise is appointed at SAA to ensure a smooth transition from business rescue.
The business rescue practitioners said in the update released on Friday they were “making every effort to finalise the outstanding items by the end of March 2021" after which a “notice of substantial implementation” of the business rescue plan would be filed with the Companies and Intellectual Property Commission.
Thereafter the company would be placed in the hands of the interim board.
They said the business rescue process had been successful and they had achieved what they set out to do, which was “to transition SAA from being an insolvent company to a company that is both solvent and liquid”.
SAA’s liabilities were reduced by R35.7bn to R2.3bn due to “the compromise ... negotiated by the business rescue practitioners with concurrent creditors and lessors”. The workforce had been reduced from 4,700 to about 1,000 through voluntary severance packages and retrenchments.
They had so far received R7.8bn of the R10.3bn allocated by the Treasury to implement the business rescue plan, part of which was used to settle debt.
Included in the R10.3bn was R2bn in working capital that would be used to restart the airline.
The business rescue practitioners also said SAA’s board and management were “busy working on the restart plan and the resumption of operations of the restructured SAA” and the airline had “received funding for this purpose”.
On introducing a strategic equity partner at SAA, Dongwana and Matuson said this process was “being driven by and is the responsibility” of the department of public enterprises, as the shareholder of the airline.
“They [the department] will provide updates on this process when they deem it appropriate,” they said.
Department of public enterprises spokesperson Richard Mantu said the process of identifying the preferred strategic partner for the airline was at an “advanced stage based on the shortlist developed”.
He said the next step would be to conduct a due diligence on the preferred partner and to provide them with an opportunity to do the same on SAA.
Dongwana and Matuson also addressed criticism about the lengthy rescue process, saying “the funding of the SAA business rescue was always dependent on government funding and substantial implementation thereof on the receipt of that funding to implement the plan”.
They said the only way for the government to provide funding to SAA was through “budgeting processes” and that the company “struggled for over three months” in early 2020 to obtain funding from its lenders even though it had a R2bn government guarantee.
They said that only in October last year, 11 months after the business rescue plan was started, was R10.3bn “eventually allocated” for the implementation of the plan. They said R7.8bn of this amount was only received at the end of February this year and that this payment enabled them to “finalise the implementation of the plan that includes payment to employees and creditors”.
The remaining R2.5bn, which includes payments for concurrent creditors, funding part of the “unflown” ticket liabilities to customers, and payments to lessors, will be received later, with the first tranche being payable in August this year.
While there is a promise of a new dawn for SAA it will have its work cut out for it when it does eventually resume operations.
Linden Birns, MD of airline consultancy Plane Talking, said SAA would be “coming back into a radically changed market” where the recovery of the airline industry is going to take a long time.
“Demand and confidence in long haul travel are not there at the moment.
“There are big efforts being made to rebuild that confidence and measures like having a travel pass, which allows travellers to verify their Covid tests and/or Covid vaccine credentials, will only work if governments all agree on a globally accepted standard for a travel pass,” said Birns.
He was referring to a proposal from the International Air Transport Association that is being rolled out and tested in various countries.
It allows travellers to retrieve their vaccine certificates and store them in digital format as opposed to “paper-based documentation, which is open to fraud”.
“This kind of travel pass will go a long way to instilling confidence in the market but there is a long way to go.”
