The proposal for a $1.2 billion state bailout of South African Airways which was leaked over the weekend is a starting point for discussion and to assume it is the final version is “very irresponsible”, said the airlines administrators Deloitte.
In return for the loan the draft proposal would see the South African government set-up a new company controlled by the Department of Public Enterprises (DPE). The new company would assume all of SAA ‘s assets while the DPE take on the costs of setting-up as well as assuming the firm’s existing debt.
However in a statement on SAA’s website Deloitte’s joint Business Rescue Practitioners (BRPs), Les Matuson and Siviwe Dongwana said that the document was intended to start discussion and further changes could be added.
“The draft plan was sent to the creditors’ and employees’ committees as well as the DPE. The draft has however been leaked to the media. As was noted in the draft business rescue plan, ‘It is for discussion purposes and may not be circulated to any other party’. To assume and comment on this draft as if it is the final version would be very irresponsible.”
However, if the plan does go forward as suggested it would be the second major cash injection into SAA by the country’s government this year following its approval for a US$950 million loan in February.
The SAA fleet was grounded entirely in March due to the government closing borders and previously, and administrators are now terminating leases on nearly half the airline’s 40 leased aircraft, while those on another 15 have been undergoing renegotiation.
According the draft business plan which was leaked by opposition MPs SAA had 40 airplanes on lease when it entered the business rescue process in December last year.
The plan shows among others termination of leases is being carried out on six Airbus A330-200s, three A340-300s, three A340-600s, and seven A319s. Some of these terminations have been concluded and the aircraft returned.