South African Airways gets $272m lifeline amid rescue

South African Airways workers went on strike last month over wages and job cuts, forcing the airline to cancel hundreds of flights. (Reuters)
Updated 05 December 2019

South African Airways gets $272m lifeline amid rescue

  • The airline, hit by employee strike last month, has not made a profit since 2011

CAPE TOWN: South African Airways (SAA) was set to enter a business rescue process on Thursday, with a 4 billion rand ($272 million) lifeline from government and banks announced by a minister.

State-owned SAA, which has not made a profit since 2011 and has depended on government bailouts to stay solvent, said it would try to operate a new provisional
flight schedule.

In a business rescue, a specialist practitioner takes control of a company with the aim of rehabilitating it to improve its chance of survival, or securing a better return for creditors than they would receive from liquidation.

SAA said the process sought to provide the best prospects for “selected activities within the group to continue
operating successfully.”

The airline was hit by an employee strike last month that forced it to cancel hundreds of flights and pushed it to the brink of collapse. Then two major travel insurers stopped covering its tickets against the company becoming insolvent.

HIGHLIGHTS

• SAA close to financial collapse.

• Government wants to salvage airline.

• SAA to operate provisional timetable.

On Wednesday, a deputy minister, who declined to be identified due to the sensitivity of the matter, told Reuters he had received an official letter saying President Cyril Ramaphosa had called for a change of approach on SAA and that the airline would enter “voluntary business rescue.”

Pravin Gordhan, minister of public enterprises, said in a statement on Thursday that business rescue was the best way to
restructure SAA into a stronger entity. He said the plan was still to attract an equity partner.

Existing lenders would provide SAA 2 billion rand of loans guaranteed by government and repayable out of future budget appropriations. Government would provide 2 billion rand in a “fiscally neutral manner,” Gordhan said.

SAA’s government-guaranteed debt would not be affected by the business rescue process, Gordhan said, but analysts expect other creditors to suffer losses.

Hans Klopper of BDO Business Restructuring said the rescue process for SAA could be fraught with difficulty and that it could take months if not years to find a solution to the airline’s problems.

A relatively small amount of SAA’s assets could be recoverable. The rescue process could further dent confidence in the airline, he said.

“If there aren’t willing patrons prepared to book flights then the bottom falls out of the whole business,” Klopper said.

“With SAA there is a structure of devastation, but you may have somebody who comes in and offers, say, 1 cent on the rand. Because some creditors could get zero if there is a liquidation.” 


Getting more women into leadership positions top priority: CEO

This June 23, 2018 photo, shows a general view of Riyadh, Saudi Arabia. (AP)
Updated 18 January 2020

Getting more women into leadership positions top priority: CEO

  • Saudi Arabia is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic

RIYADH: The boss of one of Saudi Arabia’s biggest banks says that getting more women into leadership positions is a top priority.
Samba CEO Rania Nashar chairs the action council for Women in Business created by the Business Twenty (B20), which is the official G20 dialogue with the business community. It represents the global business community across all G20 member states and all economic sectors.
She said the council was set up to boost women’s particpation not only in business but also in global leadership positions.
During the launch of the B20 in Saudi Arabia this week, Nashar highlighted the under-representation of women in the economy.
“There is a gap of 27 percent between male and female workers; 75 percent of males are part of the labor force while only 48 percent of females are working,” she said.
She said it was important not to just talk about women as workers but as business owners.

FASTFACT

Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020.

“That’s why entrepreneurship is very fundamental to our task force,” she said.  “The majority of the finance development programs have incentives for giving loans to females; however, despite the fact that many large borrowers are females, the amount of loans granted to them is far below what is granted to males,” she added.
Nashar said that two-thirds of female business founders feel that they were not taken seriously by investors when they pitch for investments. They also feel that they are treated differently from their male counterparts.
Saudi Arabia will host the 15th G20 Summit in Riyadh on Nov. 21-22, 2020. The Kingdom is focusing on the Business 20 (B20), making this one of the key engagement groups. Women in Business will be Saudi Arabia’s signature topic.