President Cyril Ramaphosa has ordered the embattled South African Airways (SAA) to be placed under a business rescue plan, a parliamentary committee said on Thursday, 5 December 2019.
Parliament’s Standing Committee on Public Accounts said Ramaphosa had sent it communication to confirm that he had decided that the national airline must be placed under a business rescue plan in order to save it from total collapse.
The SAA, which has not made a profit since 2011, is dependent on government bailouts to remain solvent. It suffered a loss of 360 million dollars in 2018 and is expected to lose 333 million dollars this year.
The government recently funded the national carrier to the tune of 367 million dollars, with a commitment to pay off some 600 million dollars of its debt in order to keep it afloat, the parliamentary committee’s records show.
The flag carrier suffered a weeklong crippling strike in November, which forced it to cancel hundreds of flights, thereby pushing it to the brink of collapse.
Ramaphosa, who is currently on a whirlwind working tour of West Africa, is reported to have called for a change of approach on SAA in his communication to the committee.
He therefore instructed the government to implement a voluntary business rescue process, the parliamentary committee said.
In a business rescue process, a specialist administrator takes control of a company with the aim of rehabilitating it to improve its chances of surviving or to secure a better return for creditors than they would get from a liquidation, according to business analysts.