SAA Subsidiaries to Receive R2.7 Billion From Business Rescue Plan
- A whopping R2.7 billion has been set aside to give to subsidiaries of South African Airlines, say reports
- This is part of the R10.5 billion business rescue plan for the subsidiaries which haven't gained much attention since 2019
- Mango, SAAT and Air Chefs will all receive a portion of the R2.7 billion with Mango Airlines gaining the most
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Approximately R2.7 billion of the R10.5 billion is set to be given to subsidiaries of South African Airways (SAA) in a step to set in motion its business rescue plan.
SAA subsidiaries Mango, SAAT and Air Chefs have so far been neglected despite SAA being under business rescue since December 2019 as these subsidiaries were not included in the rescue plan.
This consequently resulted in SAA business rescue practitioners not being legally able to allocate a portion of the post-commencement finance to the subsidiaries.
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On Tuesday, a special Appropriation Bill headed by the Minister of Finance Tito Mboweni was tabled. This resulted in the funding being divided among SAA Technical (SAAT), Mango Airlines and Air Chefs with SAA Technical (SAAT) set to receive R1.663 billion, Mango Airlines R819 million, and Air Chefs R218 million.
Ravesh Rajlal Chief Director of state-owned enterprises at National Treasury said while speaking with parliament’s standing committee on the matter of appropriations on Tuesday, that during the time the funding was allocated for SAA, the Department of Public Enterprises (DPE) warned Treasury about the allocations given to SAA subsidiaries.
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This was in relation to the business rescue plan which may change as a result of the foreseen restructuring of the airline after the interim board takes over.
The absence of allocated funding towards the SAA subsidiaries added to the drastic impact brought about by the Covid-19 pandemic has consequently resulted in the three subsidiaries in dire need of funding.
The limited funding caused Mango to suddenly suspend their flights in April after being unable to settle payments relating to passenger service charges and landing and parking fees with the Airports Company of South Africa (Acsa).
Following reports by Moneyweb the initial hefty lockdown of 2020 resulted in SAAT and Air Chefs not being able to pay their employees their full salaries with SAAT employees living from between 25% and 50% of their total salaries every month for the last year.
According to The South African, SAA is now being run by its own board, with interim CEO Thomas Kgokolo at the lead.
Previously, Briefly News reported that Minister of Public Enterprises Pravin Gordhan said that the government will take responsibility for all restructuring costs in terms of South African Airways (SAA). The embattled airline was allocated R10.5 billion last year for business rescue.
Gordhan was speaking to Parliament's Standing Committee on Public Accounts (Scopa) and Business Rescue Practitioners (BRPs) on the rescue process. The Minister stated that no further contributions will be made to the state-owned entity.
Gordhan made revealed the news after Democratic Alliance MP Alf Lees inquired about any further funding towards the airline from the state after the conclusion of the business rescue process.
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Source: Briefly News
