The business rescue practitioners at SAA have warned that the national airline has run out of funds and may have to start liquidation proceedings.

The airline does not have sufficient funds available to continue honouring the obligations of SAA to its employees beyond 30 April 2020 and to bear the costs of the wind down process.

Post commencement funding of R5.5 billion – which is funding extended by Treasury to the airline subsequent to going under business rescue – had been fully drawn and utilised by March 2020.

The airline’s financial rescue now seems increasingly remote, having been hit by the grounding of flights due to the Covid-19 lockdown.

“If the practitioners cannot reach an agreement with employees, then the practitioners are unable to continue with the business recue process and the practitioners will have to make an urgent application for an order discontinuing the business rescue proceedings and placing SAA into liquidation,” say the business rescue practitioners.

“Given the fact that the practitioners have no further funding, the practitioners have considered whether they can develop a business rescue plan which secures a better return for SAA’s creditors than would result from its immediate liquidation. This entails a wind down process which would envisage the termination of the employment of employees by agreement (with severance packages being agreed), a sales process being undertaken which will ultimately result in a distribution of such proceeds to affected parties who are entitled thereto in terms of the business rescue waterfall . If an agreement can be reached with the employees, a business rescue plan can be developed and published.”

SAA has run up accumulated losses of close to R30 billion over 13 years, most of this occurring under former chairperson Dudu Myeni. The closure of the airline not only affects the roughly 10,000 staff at SAA and associated companies, but would represent a huge loss of revenue to the Airports Company of SA. It remains to be seen whether one of Africa’s most visible airline brands is salvaged in some form or another – perhaps under private operators.