The process to decide if the airline could be rescued could take a few months if not a year, instead of the usual 25 business days.
Experts say South African Airways (SAA) has a tough challenge ahead of it and a special person would be needed to take the reins, after Public Enterprises Minister Pravin Gordhan solidified government’s plan to place the embattled national carrier under business rescue.
In a statement yesterday, Gordhan had announced that the government was in full support of the SAA board volunteering to be placed under business rescue.
“This is 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.
“Our desire is that the restructured airline will mark the beginning of a new era in South African aviation and must be able to bring in millions more tourists into SA; help create more jobs in tourism and related sectors of the economy; work with other African airlines to underpin and service the integration of African markets; and improve dramatically intra-African trade and travel.
“It is also important that the reliance on government finances be reduced as soon as possible and to minimise disruption to SAA services, customers, staff and other stakeholders,” said Gordhan.
While business rescue experts did not disagree with this, they agreed the flag carrier had a tough road ahead.
Senior business rescue practitioner at Corporate Business Rescue and practising lawyer George Nell explained that the chosen practitioner’s first step would be to take full management control which, according to the law, included all the company’s affairs, business, property and finances.
He said there was then a timeline in which he had to work and carry out his investigations on the company.
“According to section 147 and 148 of the constitution, the business rescue practitioner will then have to set up a credit risk meeting with the creditors and another meeting with employees 10 business days after being appointed to discuss whether the company can be rescued and how he/she plans to do so or whether it should go into liquidation.”
He said 25 business days after being appointed, the practitioner had to publish a business rescue plan and if he/she needed more time they needed to gain permission from the creditors or a court of law.
Business Rescue Exchange chief executive officer Adriaan Smuts said he was convinced that “in a company as big as SAA and problems as complex as SAA, I don’t think it will happen in 25 days and it will probably take a couple of months if not a year”.
He added that since it was a voluntary business rescue and SAA had the power to choose a business rescue practitioner, it would be a wise c