(4 minutes read)
· The long-awaited business rescue plan for South African Airways is unveiled. According to the plan, the government will have
to raise more than R10 billion, to pay off the creditors who have funded the airline since it went into business rescue in last
December and to meet employee severance packages.
· Now, creditors of the airline have to vote on the proposed rescue plan.
· The Companies Act mandates that a business rescue plan requires 75% approval of the voting interest present at the relevant
creditors meeting.
The long-awaited business rescue plan for South African Airways is unveiled. According to the plan, the government will have to raise
more than R10 billion, to pay off the creditors who have funded the airline since it went into business rescue in last December and to
meet employee severance packages. The rescue plan will be voted by the affected parties at a future date to be announced later.
The rescue plan proposes that the government has to fund the new airline if no equity partner can be found before July 15. The business
rescue practitioners have been trying to obtain strategic equity partners for the flag carrier without success, due to poor market
conditions in the global airline industry. The rescue plan envisages full domestic services by January 2021. It will be operated by the restructured national airline in accordance with the passenger demand. New aircrafts will be deployed depending on demand. Newer
destinations including international routes will be identified based on global market and passenger demand.
The practitioners were to publish their rescue plan at the end of February. They were granted repeated extensions since they needed
more time engage with stakeholders and to discern the complex issues. SAA has incurred huge accumulated losses since 2014.
Now, creditors of the airline have to vote on the proposed rescue plan. The Companies Act mandates that a business rescue plan requires
75% approval of the voting interest present at the relevant creditors meeting. Those creditors who do not attend the meeting are
automatically disqualified. If the plan is not approved at the first meeting, a second meeting is allowed to consider the revised agenda.
If that also fails, the company has to be placed under liquidation.
