South Africa’s beleaguered national carrier is being placed into “business rescue”, giving the airline breathing room to radically restructure, Public Enterprises Minister, Pravin Gordhan, said on Thursday.
The government is contributing two billion rands ($137 million) to the effort to save South African Airways (SAA), as will the state-owned company’s existing lenders, Gordhan said in a statement.
“This should help prevent a disorderly collapse of the airline,’’ he said.
“It must be clear that this is not a bailout,’’ Gordhan added.
“This is the provision of financial assistance in order to facilitate a radical restructure.’’
Under South African law, a business rescue is meant to “facilitate the rehabilitation of a company that is financially distressed’’ by allowing its temporary supervision by a so-called business rescue practitioner, a temporary moratorium on claims against it and the drawing-up of a restructuring plan.
SAA has long faced financial difficulties. In June, its board of directors had announced that the flagship carrier needed an additional four billion rands to survive the current financial year.
The airline’s board has approved the business rescue, saying in a statement that this would “create a better return’’ for its creditors and shareholders.
“The company is seeking to … provide the best prospects for selected activities within the group to continue operating successfully,’’ SAA said.
The airline said it would soon issue details on a “new provisional timetable’’.
“This set of actions should provide confidence to customers of SAA to continue to use the airline,’’ Gordhan said.
“Our desire is that the restructured airline will mark the beginning of a new era in South African aviation.’’ (NAN)