South African Airways (SAA)’s board of directors has adopted a resolution to place the company into business rescue at the “earliest opportunity”.
The country’s national airliner had been in consultations with the department of public enterprises (DPE), in an effort to find a solution to its financial woes.
“The considered and unanimous conclusion has been to place the company into business rescue in order to create a better return for the company’s creditors and shareholders, than would result from any other available solution,” SAA said in a statement.
The company said it will operate a new provisional timetable, whose details would be published, “shortly”.
Business practitioners will also be appointed in the near future.
Minister of Public Enterprises Pravin Gordhan said the business rescue was the optimal mechanism to restore confidence in SAA and to safeguard the “good” assets of SAA and help to restructure and reposition the entity into one that is stronger, more sustainable and able to grow and attract an equity partner.
Although, he said SAA’s reliance on government finances should be cut, Pretoria will give the national airline an additional R2 billion to keep it flying.
“It must be clear that this is not a bailout,” the minister said.
"This is the provision of financial assistance in order to facilitate a radical restructure of the airline."
SAA had been going through difficult challenges over the years, and more particularly in past few weeks.
A strike initiated by the National Union of Metalworkers of South Africa (Numsa) and South African Cabin Crew Association (Sacca) is said to have caused immense damage to the reputation, operations, and the deterioration of the finances of SAA.
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