South African Airways (SAA) will be placed under voluntary business rescue according to a leaked memo.
The letter, drafted by secretary of the cabinet Cassius Lubisi, informs cabinet ministers and deputy ministers that the airline would have to “urgently” go into voluntary business rescue “to avoid an uncontrollable implosion of the airline”
“The voluntary business rescue will also prevent liquidation applications by any of SAA’s creditors, which would land the airline in an even worse position,” said Lubisi.
It is not a secret that South African Airways (SAA) has not produced annual financial statements since the March 31, 2017 annual report.
This means it has contravened the Public Finance and Management Act (PFMA), the Companies Act, and the King IV Code of Corporate Governance.
SAA has received R57 billion in bailouts since 1999 and has currently experienced difficulties in milking more money from Treasury and lenders as it struggles to cover its costs.
The announcement comes barely a week after the troubled airline communicated its intention to oppose an application by labour union Solidarity for the beleaguered state carrier to be placed under business rescue.
Also on Sunday night Minister of Public Enterprises Pravin Gordhan,said that the airline could no longer continue in its current form and that it would go through a “radical restructuring process”.
This is the first time since 1994 that a state-owned entity (SOE) has been placed under business rescue.