Administrators Want South African Airways Handed Back By April – Simple Flying

Administrators in charge at South African Airways (SAA) plan to hand the airline back to management by the end of March, should all terms and conditions be met. The airline has been under administration since December 2019 and put a stop to all operations in September 2020 due to low funds.

SAA will now hopefully be handed back before April. Photo: Getty Images

South African Airways to emerge from administration

SAA will be handed back to management by the end of the month after spending over a year under administrators. According to Reuters, administrators, who have been called Business Rescue Practitioners (BRPs), are looking to hand over the airline before April after receiving enough money in bailouts.

All parties involved had hoped for this to happen by March, but this has now been pushed back to April. SAA was promised an R10.5 billion ($715 million) bailout in the South African government’s October budget, with administrators claiming to have received R7.8 billion ($529 million) so far.

Money from the bailout includes:

  • R1.5 billion ($102 million) on severance packages
  • R400 million ($27 million) transferred to creditors
  • R360 million ($24.5 million) has fulfilled unpaid salaries
  • Additional funds reserved for working capital after a restart
  • Paying back passengers who had bought tickets
The airline will still need to make further payments before control is relinquished. Photo: Getty Images

However, before administrators give up control of the airline, further payments to employees and creditors are needed. Administrators also want a receivership set up to ensure all debt obligations are met. While most SAA funding has been from the state, the airline has also taken on capital from other creditors since going into administration in December 2019.

The rescue team claims that the beleaguered carrier’s debt has been reduced by R35.7 billion ($2.43 billion) since they took over. Additionally, the airline’s workforce has been cut from 4,700 employees to just 1,000. Laying off employees has been one of several cost-cutting measures SAA has resorted to, including selling off stock such as chopsticks, toothpicks and oven bags.

An end to the SAA saga finally in sight?

The South African government hasn’t been too pleased with the way administrators are handling things at SAA. Earlier this week, Mkhuleko Hlengwa, Chairperson for the Standing Committee on Public Accounts (SCOPA), said he was “fed up” with the level of cooperation from administrators, stating it has “has not been on a level which is satisfactory.” 

South African Airways SAA A340
The long-running SAA saga has involved dozens of state bailouts. Photo: Getty Images

This dispute arose after administrators failed to provide parliament with an update on how the rescue process was going. The SCOPA committee claims to have sent a request on March 3rd, with the rescue team claiming they didn’t receive any such request until March 10th.

Restarting flights may be on the horizon

The management and board of directors at SAA have hinted there is a plan to resume flights on the table. Although no firm date has been set, the airline feels it has enough working capital to begin flying again. SAA had a sizeable fleet of 49 aircraft before entering administration and has since returned 40 of those to lessors.

South African Airways Aircraft
Bosses at the airline are considering plans to resume flights, with no date earmarked as of yet. Photo: Getty Images

Many have called South African Airways a lost cause, with the airline failing to run a profit in 10 years and receiving countless state-funded bailouts over the years. On top of the R10.5 promised in October, the airline received R21 billion (($1.4 billion) in June and R3.5 billion ($238 million) earlier in 2020. South African authorities have persisted in their support for the airline, which may now finally pay off.

Do you think the South African government was right to persist with SAA? Let us know your insights and thoughts in the comments.

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