South African Airways (SAA)—one of Africa’s largest carriers have gained a promising turn, as its administrators said conditions for a business rescue were met to bring the state-owned carrier back to operations.
According to information from Bloomberg News, the administrators did not provide any further notice to affected parties on Tuesday, Bloomberg reported that “whether the government had met their demand to place in an escrow account $988 million the state has guaranteed to creditors should the carrier fail. The Treasury said on Monday its usual guarantees should suffice”
The SAA which was illustrated by News24 a South African business publication, that had a net asset value of nil in 1999 and since then has contended with a weak balance sheet exaggerated by weak management and a poor business model.
Further, the which SAA has received no less than $3 billion in bailouts or recapitalization over 20 years, starting from 2000, might get a strong resuscitation as the administrators accepted a letter saying that the treasury will “mobilize” just over $604 million needed to keep the airline functional.
Also, Bloomberg News noted that the South African Finance Minister Tito Mboweni said the funding will be sought from private investors.
The airline established in 1934 has been experiencing a rather challenging journey, whereby it had no less than nine CEO between the year 2010 and late 2019, when the South African government went and opted for voluntary business rescue, according to News 24.
However, looking back earlier this month when SAA creditors and unions approved a rescue plan that includes at least $1.6 billion in state funding and thousands of job losses, it seems the carrier could bounce back to the skies.
As the state-owned airline pull politicians into different stances, such as the Finance Minister and Public Enterprises Minsters—who favours SAA being rescued despite being a fund sucking and loss-making government company, as argued by Tito Mboweni.
According to a report by News24, to date, the debt guarantee awarded to the airline stands at nearly $1.1 billion, and with around $ 1 billion exposure.
Currently, the new situation will eliminate the anticipated liquidation but unfortunately cut down nearly 1,000 workers from around 4,700, according to Bloomberg News.
The coronavirus pandemic has also contributed into shredding most hopes for the airline, as skies went silent without planes hovering over continents, limiting tangible rescue plans to take place.