SAA GETS RESCUE PLAN GOING
As National Treasury pumps in another R4 billion bailout to troubled national airline
SOUTH African Airways (SAA ) yesterday appointed Les Matuson as the man to rescue the airline from its turbulence.
Matuson was appointed hours after the government put in a further R4 billion to SAA as the struggling airline filed for voluntary business rescue.
According to his profile on the website of Matuson Associates, Matuson has been active for about 35 years as a business adviser and turnaround specialist.
He has reportedly supervised and maximised recoveries in many large, high-profile corporate matters, including Ellerines.
Public Enterprises Minister Pravin Gordhan said existing lenders would provide a government-guaranteed R2bn loan as post-commencement finance, while the National Treasury would provide an additional R2bn.
“It must be clear that this is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline,” Gordhan said. “It is also important that the reliance on government finances be reduced as soon as possible and to minimise disruption to SAA services, customers, staff and other stakeholders.”
However, the government remained coy about where the money will come from, since the fiscus is already overcommitted this financial year.
The business rescue pre-empted the hearing of trade union Solidarity’s similar application launched two weeks ago.
Business rescue is an insolvency protection mechanism where a court of law appoints a practitioner to rescue a financially distressed company which is failing to meet its debt obligations.
Liquidation, on the other hand, would have rung the death knell for the 85-year-old State-owned airline.
Acting deputy director-general of the department of public enterprises, Melanchton Makobe, said the business rescue plan was “in effect a restructuring plan” for SAA.
Makobe said SAA needed post-commencement finance for the business rescue procedure to succeed, saying that the R2bn government funding was not a bailout, but to give SAA
“oxygen”.
“Post-commencement finance is finance that is required to effectively put oxygen into the company, to make sure that there is enough cash for the company to continue operating,” Makobe said.
“The most important matter about business rescue is that there is a moratorium on legal proceedings against the company.
“Although the board of directors will still be part of the company, whatever duties that they perform will be under the direction of the business rescue practitioner.”
SAA continues to face financial and operational headwinds following last month’s crippling workers’ strike for higher wages and a halt to restructuring plans, which could result in hundreds of workers being retrenched.
The SAA group entails the main airline; SAA Technical, which deals with maintenance; catering business Air Chefs; and subsidiary low-cost airline Mango.
SAA spokesperson Tlali Tlali said the company would endeavour to operate a new provisional timetable and would publish details shortly.