MIAMI – Creditors have approved the proposed business rescue plan for South African Airways (SA), preventing the airline’s liquidation.
Approximately 85% of the creditors voted in favor of the scheme. The plan will see the airline move into the ownership of creditors and employees.
Just before the creditors voted, Kgathatso Tlhakudi, acting director-general of the department of public enterprises, addressed the meeting to say that government supports restructuring SA into a commercially sustainable airline, while minimizing the impact of the airline’s restructuring on job losses.
In his view, the airline that will emerge from the restructuring process will be an attractive asset for an equity partner.
Phillip Saunders New Interim CEO at SA
Also today, the Department of Public Enterprises’ acting director-general Kgathatso Tlhakudi announced that the airline’s interim Chief Executive Officer will be Phillip Saunders, currently SA’s Chief Commercial Officer.
The director said, “Government in the coming days will announce an interim board for the new SAA… But we are pleased to announce that we will have an interim CEO in the name of Phillip Saunders, who is a very credible airline executive.”
South African Airlines has had two CEOs resign in less than a year. Vuyani Jarana resigned in June 2019 and acting CEO Zuks Ramasia left for early retirement in April.
A New Plan for SA
In December 2019, the airline first entered a business rescue state. The financial losses of the last two years are over R10bn, with the South African Government putting in R30bn in the previous ten years.
This new plan should reduce the expenditure for the government, who will only hold a minority stake in the airline under the rescue plan.
The proposed rescue measures can only reach implementation if appropriate funding is found, with a deadline of July 15.
Finance Minister Tito Mboweni did not allocate any additional funds for SA in his supplementary budget announced at the end of June, meaning these plans are the last straw for the airline to avoid liquidation.