Left Menu
Development News Edition

UPDATE 2-South Africa's struggling SAA to enter business rescue


UPDATE 2-South Africa's struggling SAA to enter business rescue
Image Credit: Wikipedia

Failing state-owned airline South African Airways (SAA) will enter a business rescue process, a deputy minister and the parliamentary committee conducting oversight of the airline said on Wednesday. SAA, which has not made a profit since 2011 and is dependent on government bailouts to remain solvent, suffered a crippling strike last month that forced it to cancel hundreds of flights and pushed it to the brink of collapse.

The deputy minister, who asked not to be named because of the sensitivity of the subject, told Reuters he had received a letter from the secretary of the cabinet which said President Cyril Ramaphosa had called for a change of approach on SAA and instructed the government to put the airline in a "voluntary business rescue process". 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.

Parliament's Standing Committee on Public Accounts (SCOPA), which had been due to meet SAA on Thursday, said in a statement its chairperson had also been told about the plan. "The committee has been informed that this is the only viable route to avoid an uncontrolled implosion of the national airline. SCOPA is made to understand that an administrator will move in and the board will effectively not be in charge," the committee said in a statement.

State broadcaster SABC also reported that SAA would have to go into business rescue, citing a leaked letter. Ramaphosa's spokeswoman Khusela Diko did not respond to a request for comment, but she was cited by the Times Live news website as saying the letter was official correspondence to ministers and deputy ministers.

SAA spokesman Tlali Tlali could not be reached for comment. Public enterprises ministry spokesman Sam Mkokeli declined to comment. SAA lost more than 10 billion rand ($700 million) in the past two financial years, documents seen by Reuters showed this week.

Banks have refused to lend more money to SAA without new state loan guarantees. Finance Minister Tito Mboweni is trying to halt repeated bailouts to ailing state firms like SAA and has refused to sign off on new guarantees, however.

Some economists have welcomed the government's tougher stance on SAA, saying it could help avert another credit rating downgrade to "junk" status.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)


TRENDING

OPINION/BLOG/INTERVIEW

Hyderabad Encounter: Time to review modern judiciary and restore people’s confidence

Its probably for the first time in the history of independent India, the parliamentarians, chief ministers and ministers in the Union and State governments are openly supporting an encounter. This indicates the people from top to bottom hav...

What happens to your outstanding loans if the bank falls?

... ...

Time for a change! Innovations to stop the growing plastic pollution

As the planet is drowning in plastic pollution, many new innovative approaches and solutions have emerged to effectively deal with the menace....

How to avoid fake universities and fishing bait like Farmington

As education sharks are roaming around to prey, we present a guide on how to mitigate hunters and reach to a genuine universityinstitute. In this era of commercialization of education, the fake universities and economic frauds in educationa...

Videos

Latest News

Universities great hubs of ideas, but not ivory towers: Prez

President Ram Nath Kovind on Sunday said that universities are great hubs of ideas but not ivory towers, and should act as agents of social change. The academic community should be engaged in research in areas that create not only a new kn...

Need for strict implementation of law to curb rapes: Naik

Union minister Shripad Naik on Sunday expressed the need for strict implementation of laws to punish rapists. When asked about recent incidents in Unnao and Hyderabad, he said, Cases are being reported from across the country. There is a n...

Survivor says he could escape as he was sleeping near the door, others were not so lucky

On Sunday morning, 32-year-old Firoz Khan woke up to flames engulfing the room where he was sleeping along with his fellow workers in a building in Anaj Mandi. Khan, who is among the survivors of the deadly blaze which killed 43 persons, sa...

Anaj Mandi blaze one of the worst fire tragedies that hit Delhi

The Anaj Mandi inferno that killed at least 43 people on Sunday morning is the most severe fire in the national capital after the Uphaar Cinema tragedy that claimed 59 lives and left over 100 injured. The theatre in the posh Green Park area...

Give Feedback