Struggling state-owned airline SAA will be placed under voluntary business rescue according to a leaked memo to the executive on Wednesday.
The letter, drafted by Secretary of the cabinet Cassius Lubisi, informs cabinet ministers and deputy ministers that the airline would have to “urgently” go into voluntary business rescue “to avoid an uncontrollable implosion of the airline”.
The letter comes as a directive from President Cyril Ramaphosa who said it was the only viable solution to the “dire situation” the airline finds itself in.
“The voluntary business rescue will also prevent liquidation applications by any of SAA’s creditors, which would land the airline in an even worse position,” said Lubisi.
The update comes after a wage strike by the South African Cabin Crew Association and the National Union of Metalworkers of South Africa last month which saw the cancellation of flights.
In a statement released on Sunday, Minister of Public Enterprises Pravin Gordhan said the strike had damaged the airline’s reputation and that it would need to go through “radical restructuring” to ensure its operational sustainability.
SAA has received R57 billion in bailouts since 1999 and has currently experienced difficulties in milking more money from Treasury and lenders as it struggles to cover its costs.
Source: Moneyweb
