Thu, 05 Dec 2019 12:46 - Updated Thu, 05 Dec 2019 12:45
S. African cash-strapped national carrier placed under business rescue
CAPE TOWN-- South African Airways (SAA) announced on Thursday that its Board of Directors has adopted a resolution to place the company into business rescue at the earliest opportunity.
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As previously announced, the SAA Board of Directors and the Executive Committee have been in consultations with the shareholder, the Department of Public Enterprises (DPE), in an effort to find a solution to the company's well-documented financial challenges, the airline said in a statement.
The considered and unanimous conclusion has been to place the national carrier into business rescue in order to create a better return for the company's creditors and shareholders, the statement said.
Furthermore, the company is seeking to minimize the destruction of value across its subsidiaries and provide the best prospects for selected activities within the group to continue operating successfully, said the statement.
It said SAA understands that this decision presents many challenges and uncertainties for its staff.
The airline will engage in targeted communication and support for all employee groups at this difficult time, according to the statement.
This came after President Cyril Ramaphosa on Wednesday ordered that SAA be placed in urgent voluntary business rescue due to its beleaguered situation.
The term "business rescue" means that the airline would be saved from being liquidated by its creditors.
SAA has relied on government bailouts for continued operation mainly due to poor management. Over the past 13 years, the airline has incurred over 28 billion rand (about 1.9 billion U.S. dollars) in cumulative losses.
The government has allocated 20 billion rand to bailout the airline in recent years.
Late last month, a week-long strike paralyzed SAA operations, dealing a heavy blow to the struggling airline.
On Wednesday, the opposition Democratic Alliance (DA) called for the debt-ridden airline to be shut down.
"SAA must be placed into business rescue to prepare for break up and sale as soon as possible," said Geordin Hill-Lewis, Shadow Finance Minister of the opposition Democratic Alliance.
"Not one further cent of public money, or a guarantee backed by public money, should be spent on SAA," Hill-Lewis said,XINHUA.
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