DPE: SAA’s BRP success depends on financial health of subsidiaries
The Department of Public Enterprises (DPE) on Wednesday briefed Parliament’s select committees on appropriations and public enterprises on how R2.7 billion will be spent on the subsidiaries.
CAPE TOWN - The success of South African Airways (SAA)’s business rescue plan (BRP) depends on the financial and operational health of its subsidiaries Mango, Air Chefs and SAA Technical, Parliament has been told.
The Department of Public Enterprises (DPE) on Wednesday briefed Parliament’s select committees on appropriations and public enterprises on how R2.7 billion would be spent on the subsidiaries.
The money is part of the R10.5 billion bailout given to SAA to cover its business rescue process. SAA was put in business rescue in December 2019 and exited the process in April as a going concern.
Department of Public Enterprises acting director-general Melanchton Makobe said while SAA’s subsidiaries were not put into business rescue, they faced financial challenges due to SAA being put into business rescue, while COVID-19 restrictions also impacted on their operations.
“In actual fact, if you look at the business rescue plan (for SAA) it recognises the deteriorating financial position of subsidiaries and indicates that the success of the business rescue plan is dependent on the financial viability of (SAA’s) subsidiaries.”
Makobe said that of the R2.7 billion, SAA Technical will get R1.6 billion to cover its restructuring and right-sizing. The entity lacks money to buy spares in advance or cover its costs and is paying salaries only in part.
Mango will get R819 million to help with restructuring, paying off debt and providing working capital so it can fly again.
Air Chefs will get R218 million for restructuring and to cover costs it presently cannot meet.