SAA in Business rescue

Discussions pertaining to Airline operations,safety and training for Flight Deck Crew. Open to anyone who would like to learn all aspects of the Airline industry from a pilots perspective.

Moderator: Moderators

User avatar
Darren
1k poster
1k poster
Posts: 1323
Joined: Tue Apr 25, 2006 5:56 pm
Closest Airfield: FAOR
Location: JHB
Has liked: 151 times
Been liked: 165 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Darren » Fri Dec 06, 2019 11:32 am

HJK 414 wrote:
Fri Dec 06, 2019 11:03 am
It also notes that the Government is now pouring hard cash into SAA ……

It is worth noting that government pencilled in a commitment during the Medium Term Budget Policy process in October 2019 to repay SAA’s existing R9.2-billion in debt, and provide it with R2-billion in operating capital


That is 11.2 Billion Rand of taxpayers funds / cash - going into the airline

JK
That R9.2 billion is government-guaranteed debt, meaning that the state has no choice but to pay it if SAA cannot. See my post earlier in this thread.

The alternative is that the debt is defaulted on, triggering a cross default on other government debt. That'll cost taxpayers much, much more than R11.2 billion.
GL wrote:
Fri Dec 06, 2019 11:17 am
What do we know about Les Matuson. Has he got any airline experience?
None that I can see, but then I don't know of any BRPs with airline experience in SA. They'll likely bring on outside expertise as part of the process.
Jack Welles wrote:
Fri Dec 06, 2019 11:30 am
Strictly speaking that isn't quite true. R9.2 billion will go to creditors. R2 billion will go to airline. But yes the total is priced in via the Medium Term Budget and that's, effectively, what SAA is costing the taxpayer.
Yup.

The MTBS planned to repay it over three years, to cushion the blow a little. I wonder if the BRP now means that must be accelerated. Lots of interesting new questions and edge cases when an SOE with state-guaranteed debt goes into business rescue.
HJK 414
Fife Thousand feet
Fife Thousand feet
Posts: 5678
Joined: Fri Oct 10, 2014 4:34 pm
Closest Airfield: abcd
Location: wandering ...
Has liked: 102 times
Been liked: 440 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by HJK 414 » Fri Dec 06, 2019 12:09 pm

Darren wrote:
Fri Dec 06, 2019 11:32 am
HJK 414 wrote:
Fri Dec 06, 2019 11:03 am
It also notes that the Government is now pouring hard cash into SAA ……

It is worth noting that government pencilled in a commitment during the Medium Term Budget Policy process in October 2019 to repay SAA’s existing R9.2-billion in debt, and provide it with R2-billion in operating capital


That is 11.2 Billion Rand of taxpayers funds / cash - going into the airline

JK
That R9.2 billion is government-guaranteed debt, meaning that the state has no choice but to pay it if SAA cannot. See my post earlier in this thread.

The alternative is that the debt is defaulted on, triggering a cross default on other government debt. That'll cost taxpayers much, much more than R11.2 billion.

Hi Darren,

It was actually meant as an addition to your earlier post (example of parents co-signing and not really forking out money etc etc) …..
As far as I know - this is the first time that the Government has to pay out a loan that SAA is defaulting on (previously only guarantees for loans).
Whether the funds go to the banks / a creditor or the airline is semantics in my view ……. bottom line is that the airline has lost the cash to the point that it is unable to meet it's requirement for repayment - so the Government have to make good on their guarantee …….at the end of the day - SAA have lost the cash and now taxpayers money is applied to settle the loan.

JK
These users liked the author HJK 414 for the post:
snoopy
User avatar
Darren
1k poster
1k poster
Posts: 1323
Joined: Tue Apr 25, 2006 5:56 pm
Closest Airfield: FAOR
Location: JHB
Has liked: 151 times
Been liked: 165 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Darren » Fri Dec 06, 2019 12:33 pm

Ah, ok. I see what you mean. Sorry for the misunderstanding.

Yes, as far as I'm aware this is the first time government has had to pay out on SOE debt that it has guaranteed.
User avatar
snoopy
Frequent AvComer
Posts: 886
Joined: Sun Aug 12, 2018 4:02 pm
Closest Airfield: FASH
Has liked: 127 times
Been liked: 144 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by snoopy » Fri Dec 06, 2019 12:56 pm

GL wrote:
Fri Dec 06, 2019 11:17 am
What do we know about Les Matuson. Has he got any airline experience?
He's qualified to do the BR job...looking at it from business point of view.

But he's not on his own in the process, the creditors including affected persons (or the body that represents them), are also in the process with him. He just makes the final call.

Its usually better to look at the mess objectively from outside - instead of with emotion from within. But he will obviously listen to what the rest who have votes on the future of SAA has to say. :idea:
Last edited by snoopy on Fri Dec 06, 2019 12:57 pm, edited 1 time in total.
Vivere come se mai dovessimo morire
User avatar
HAAN
Fife Thousand feet
Fife Thousand feet
Posts: 5937
Joined: Sat Aug 19, 2006 12:17 pm
Closest Airfield: OMDB
Location: UAE
Has liked: 1 time
Been liked: 29 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by HAAN » Fri Dec 06, 2019 12:57 pm

As SAA have now been placed in Business rescue, does any union still have the right for their say?
Its amazing how all the unions are all in us and arms about the appointed BR person etc except SAPA.
I suspect SAPA respect the process that SAA now have to undergo and will have to be happy of upcoming job-losses.
Hannes Meyer
User avatar
snoopy
Frequent AvComer
Posts: 886
Joined: Sun Aug 12, 2018 4:02 pm
Closest Airfield: FASH
Has liked: 127 times
Been liked: 144 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by snoopy » Fri Dec 06, 2019 12:59 pm

Yes they do if they represent affected persons. But if they make stupid choices themselves - they may just CAUSE SAA's early liquidation. SAPA also didn't partake in the strike - they are using another approach to all of this.

The BRP has the final say. The BR plan hasnt been set up yet- so no point in speculating what that will entail. They haven't even seen the financials of the last 2 years yet. And the creditors are going to want to see that.
Vivere come se mai dovessimo morire
User avatar
HAAN
Fife Thousand feet
Fife Thousand feet
Posts: 5937
Joined: Sat Aug 19, 2006 12:17 pm
Closest Airfield: OMDB
Location: UAE
Has liked: 1 time
Been liked: 29 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by HAAN » Fri Dec 06, 2019 1:05 pm

Thank Snoopy. Yup the strike was probably the most useless excersize ever.

For those like me that dont understand the BR process and what it means....2 great videos.



Last edited by Ugly Duckling on Fri Dec 06, 2019 1:32 pm, edited 1 time in total.
Reason: Embed the YouTube link
Hannes Meyer
User avatar
snoopy
Frequent AvComer
Posts: 886
Joined: Sun Aug 12, 2018 4:02 pm
Closest Airfield: FASH
Has liked: 127 times
Been liked: 144 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by snoopy » Fri Dec 06, 2019 1:09 pm

Basically the BRP must make the best informed decision he can together with the creditors - as to what they are going to do within the time frame permitted.

If the BRP determines after having had a good look at the situation - that SAA is not savable (cant pay its debt in the next 6 months) - then the BRP will instruct that the company be put in compulsory liquidation - this is a legal obligation - rather than going down a process that is fruitless.

Chapter 6 of SA Companies Act.
Last edited by snoopy on Fri Dec 06, 2019 1:18 pm, edited 1 time in total.
Vivere come se mai dovessimo morire
User avatar
ARM505
Flying to unmanned aerodrome
Posts: 382
Joined: Mon May 12, 2008 10:33 pm
Has liked: 2 times
Been liked: 13 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by ARM505 » Fri Dec 06, 2019 1:18 pm

Meanwhile, realistically, who would be buying tickets on SAA right now? How does BR affect day to day operations and basic trade? Will this be a purely high level impact for the moment, or in other words could current services be affected right now? (for example, fuelling services etc.)

Put another way, if a passenger bought a ticket for a flight tomorrow, how could they be affected, if at all?
User avatar
snoopy
Frequent AvComer
Posts: 886
Joined: Sun Aug 12, 2018 4:02 pm
Closest Airfield: FASH
Has liked: 127 times
Been liked: 144 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by snoopy » Fri Dec 06, 2019 1:22 pm

A passenger must basically ensure that the ticket or travel plan they take up with the airline or its agents, INCLUDES liquidation and business rescue travel insurance cover. Otherwise they could end up in a bad spot if their travel plan or ticket doesn't have that specific cover.

And I would ask for a printout of that specifically before flying overseas for example. The government guarantees to SAA mean squat for the ordinary traveler.

So make sure of that BEFORE you board to go overseas - read the fine print of your travel insurance covering your travel plan.

Make sure the insurance will cover your cost if the company liquidates while you are overseas. Because you will need to get back home some other way if things go belly up while you overseas.

It must be specified as a clause in the schedule of the insurer.
Vivere come se mai dovessimo morire
dollar
Rolling
Posts: 162
Joined: Mon Nov 14, 2011 11:48 am
Has liked: 86 times
Been liked: 20 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by dollar » Fri Dec 06, 2019 5:32 pm

Ticket sale volumes, or the lack thereof will probably kill it off within weeks.
Bearcat
thirty thousand
thirty thousand
Posts: 32371
Joined: Mon May 09, 2005 11:51 pm
Closest Airfield: Grand Central
Location: JHB
Has liked: 139 times
Been liked: 879 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Bearcat » Fri Dec 06, 2019 5:42 pm

Rather sad depiction from Zapiro :(
Image
User avatar
HAAN
Fife Thousand feet
Fife Thousand feet
Posts: 5937
Joined: Sat Aug 19, 2006 12:17 pm
Closest Airfield: OMDB
Location: UAE
Has liked: 1 time
Been liked: 29 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by HAAN » Sat Dec 07, 2019 9:00 am

Last edited by Ugly Duckling on Sat Dec 07, 2019 9:55 am, edited 1 time in total.
Reason: Embed the YouTube link
Hannes Meyer
User avatar
apollo11
Too Tousand
Too Tousand
Posts: 2845
Joined: Sun Mar 13, 2005 8:59 pm
Closest Airfield: FAGM
Location: JHB
Has liked: 160 times
Been liked: 75 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by apollo11 » Sat Dec 07, 2019 9:29 am

Dreadfull situation, I flew with SAA in August this year to NY and I was really impressed, the service was terrific, flying just amazing, some convective activity had to be avoided and CAT turbulence, flight deck came up warning about the weather and I could see and feel gentle turns being made to avoid some weather, the landing both dept and return were amazingly smooth.

Small things like being offered extra water all the while coffee, the crew coming to a gentle stop at holding point and taking their feet off the brakes just before the aircraft stopped was brilliant, no forward jerk, the beautifully smooth power application for takeoff and TOD, I thought many times during the dept and ret flight darn these are excellent pilots, airmanship just top class.

I'm really angry and millions of other South Africans are at govt for being the wrecking ball here with a string of last decade interfering with incompetent management (the management versus employee ratio is staggeringly inefficient)and whilst there were major blunders like route cancellations, engaging a primary school teacher (Dudu Myeni) to run an airline surely had to be the stupidest tactic of them all. On her watch, significant and disastrous decisions were also made. She must answer with jail time as many others should too.

The unions too have played a significant role in their myopic actions.

A brilliant airline on its knees probably to be beheaded. And that is just one SOE, others too getting in line.

The added tragedy is the spin-off affect more than simply a few thousand employees but many other companies and business dependant on the airline, the "mini economy" the airline generates is amazing and will be felt by many more thousands of people involved directly and indirectly, locally and internationally.

:(
These users liked the author apollo11 for the post (total 8):
Ray Wmike.allaway2DarrenjbayfanBaggieIndunadollarMouser
Straighten up and fly right!
Perry
User avatar
Caravan Driver
Heli Pilot agrees to buy Super.
Posts: 570
Joined: Sat Oct 07, 2006 2:41 pm
Location: FALA
Has liked: 0
Been liked: 8 times

Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Caravan Driver » Sun Dec 08, 2019 11:44 am

apollo11 wrote:
Sat Dec 07, 2019 9:29 am
Dreadfull situation, I flew with SAA in August this year to NY and I was really impressed, the service was terrific, flying just amazing, some convective activity had to be avoided and CAT turbulence, flight deck came up warning about the weather and I could see and feel gentle turns being made to avoid some weather, the landing both dept and return were amazingly smooth.

Small things like being offered extra water all the while coffee, the crew coming to a gentle stop at holding point and taking their feet off the brakes just before the aircraft stopped was brilliant, no forward jerk, the beautifully smooth power application for takeoff and TOD, I thought many times during the dept and ret flight darn these are excellent pilots, airmanship just top class.

I'm really angry and millions of other South Africans are at govt for being the wrecking ball here with a string of last decade interfering with incompetent management (the management versus employee ratio is staggeringly inefficient)and whilst there were major blunders like route cancellations, engaging a primary school teacher (Dudu Myeni) to run an airline surely had to be the stupidest tactic of them all. On her watch, significant and disastrous decisions were also made. She must answer with jail time as many others should too.

The unions too have played a significant role in their myopic actions.

A brilliant airline on its knees probably to be beheaded. And that is just one SOE, others too getting in line.

The added tragedy is the spin-off affect more than simply a few thousand employees but many other companies and business dependant on the airline, the "mini economy" the airline generates is amazing and will be felt by many more thousands of people involved directly and indirectly, locally and internationally.

:(
I share your sentiments. The SAA product was/ is good and as a passenger I have always felt safe, comfortable and well catered for.

As an airline pilot, and I am sure I am speaking for a lot of other South African pilots, the saddest part of SAA’s demise is that it was the airline which I aimed to fly for one day when I accumulated the right experience. Sadly that dream is probably just gonna stay a dream of what once was.

I hope this business rescue can turns things around for the better even if it it means that SAA comes back as a trimmed down version. Growth from that base again as well hopefully.
"Pilots are a rare kind of human being... They take to the skies to purify their souls and only return to earth once they have received the communion of the infinite!"

Return to “Airline Chatter”