South African Airways Exits Business Rescue After 17 Months

JOHANNESBURG (Reuters) – South Africa’s struggling national airline South African Airways (SAA) on Friday exited business rescue (a form of bankruptcy protection) after roughly 17 months.

Its administrators said in a statement that they had filed a notice of “substantial implementation” of a business rescue plan with South Africa’s Companies and Intellectual Property Commission.

SAA now solvent

That meant they had “effectively discharged the business rescue and handed over the operations of SAA back to its board and executive team”, adding SAA was now solvent.

SAA was placed under administration in December 2019, and its long-standing financial woes worsened during the COVID-19 pandemic. All operations were mothballed in September 2020.

The airline is one of a handful of South African state companies that depend on government bailouts, placing the budget under huge strain at a time of rapidly rising debt.

Negotiations with equity partner in final stages

The Department of Public Enterprises (DPE), the ministry responsible for SAA, said the government was in the final stages of negotiations with a preferred equity partner for SAA.

“A purchase and sale agreement should be concluded in the next few weeks. This will enable capital, and much-needed technical and commercial expertise to be brought in to ensure a competitive flag carrier emerges,” it said in a statement.

Neither the administrators nor the DPE said when SAA might resume flights.

(Reporting by Alexander Winning; Editing by Promit Mukherjee and Emelia Sithole-Matarise)