South African national flag carrier South African Airways (SAA) has left a form of bankruptcy protection yesterday called a “business rescue” and was handed back to its executives.
After around 17 months of bankruptcy protection to address past sins, the once bloated airline is ready to get back to business after receiving R7.8 billion ($537.87 million) from the government.
After years of struggling to make a profit, South African Airways was placed under administration and ceased all operations in December 2019. In hindsight, it was probably the best thing as nobody knew what a devastating effect COVID-19 would have on the airline industry.
SAA is now solvent
A statement released by the administrators said that they had filed a notice of the implementation business rescue with the Companies and Intellectual Property Commission stating that SAA was now solvent. South African Airways is just one of many South African companies that rely heavily on government bailouts. To make the airline more efficient, the business rescue practitioners cut almost 80% of the airline’s workforce and reduced its liabilities with creditors and lessors.
Despite being overstaffed and inefficiently run for years, the government of South Africa still feels the need to have a state-owned airline. A source in the ministry responsible for SAA, the Department of Public Enterprises (DPE), told news outlet Reuters that the government was in final negotiations with a preferred equity partner.
“A purchase and sale agreement should be concluded in the next few weeks. This will enable capital, and much-needed technical and commercial expertise, to be brought in to ensure a competitive flag carrier emerges,” said the department…