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.” 


Emirates launches airbridge between Dubai, Lebanon emergency relief 

Updated 14 August 2020

Emirates launches airbridge between Dubai, Lebanon emergency relief 

  • Customers of Emirates will be able to donate cash or pledge their Skywards Miles to the airline for the aid
  • Emirates SkyCargo will also provide 20 percent reduction on air freight transportation charges for approved shipments

DUBAI: UAE national carrier Emirates SkyCargo plans to ramp up its freighter operations to Lebanon with 50 flights to deliver emergency relief in the wake of the Beirut port blast that killed nearly 200 people.
Customers of Emirates will be able to donate cash or pledge their Skywards Miles to the airline for the aid, state news agency WAM reported.
The Emirates Airline Foundation will coordinate shipments of urgent food, medical supplies with NGO partners to ensure donations directly help those affected on the ground.
Emirates SkyCargo will also provide 20 percent reduction on air freight transportation charges for approved shipments, underscoring its commitment to expedite emergency relief efforts to Beirut.
“Today, the world is banding together to stand in solidarity with Lebanon, providing urgent relief and immediate recovery support to those affected by this tragic disaster,” Chairman and Chief Executive of Emirates Airline & Group, Sheikh Ahmed bin Saeed Al-Maktoum, said. 
“Emirates supports the UAE’s ongoing humanitarian efforts to support Lebanon and is committed to bolster its global emergency response to ensure that it can support organizations which provide urgent care, shelter, food and medical support to the Lebanese people,” he added. 
Emirates said that it had dispatched several charter flights carrying food, clothing and medical supplies donated by various grassroots organizations in the UAE to Lebanon.