South African Airways reports successful finalization of post commencement funding
The business rescue practitioners of South African Airways SOC (the Practitioners), supported by the Departments of Public Enterprises and National Treasury have been successful in obtaining the balance of the post commencement funding (PCF) required to meet the short term liquidity requirements of the airline for the period until the business rescue plan (the Plan) is published and adopted.
This Plan is required in terms of Section 150 of the Companies Act and is the responsibility of the Practitioners. The advancement of the funds comes on the back of the business rescue process which began on 5 December 2019, with the local commercial banks providing the initial PCF of R2 billion in addition to the existing exposures to SAA.
Discussions held with financial institutions have been fruitful with the Development Bank of Southern Africa offering to provide the next tranche of PCF, for a total amount of R3.5 billion, with an immediate draw-down of R2 billion. Furthermore, funding for the restructuring phase after the 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. 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.
Stakeholders of the airline should now have comfort that the rescue process is on a significantly sounder footing, and that passengers and travel agencies and airline partners may continue to book air travel on SAA with confidence.