SAA after Business rescue

[Ugly Duckling]

In a recent business rescue effort of an aviation company the creditors will be getting a maximum of 30% of their invoice values at the end of this financial year.
My advice to anyone involved with SAA is to go to cash with order terms where possible.

[Romeo E.T.]

right...what ifs

what if SAA fails, does that automatically mean that SAAT will also be "no-more" (or could SAAT be divorced from the parent SAA)
if SAAT is no more, what becomes of Mango, as SAAT is their only service provider/engineering team
if SAAT is no more, who will service the international carriers that visit our shores

will the overseas carriers withdraw their services to SA due to a lack of technical support ?

lots of what if's ?

[Caravan Driver]

right...what ifs

what if SAA fails, does that automatically mean that SAAT will also be "no-more" (or could SAAT be divorced from the parent SAA)
if SAAT is no more, what becomes of Mango, as SAAT is their only service provider/engineering team
if SAAT is no more, who will service the international carriers that visit our shores

will the overseas carriers withdraw their services to SA due to a lack of technical support ?

lots of what if's ?

I would imagine that SAAT could be separated as a separate entity if it is viable to continue trading with it’s service as a third party maintenance provider?

[snoopy]

SAAT may actually be a creditor of SAA, just like ATNS, ACSA, BidVest etc.

But what happens in the BR plan - if the BRP and creditors believe its viable to rescue SAA - will depend on the creditors and mainly the BRP when they meet to vote on this.

For example restructuring could mean that its better to break SAAT away from any state ownership, or even Mango, or the other entities SAA owns. But it wont help to speculate about it now - as the BRP and creditors will need to lay down the path forward. They all have a vested interest (financial) as does any employee of SAA; that SAA owes money. It may mean shutting down or selling off the business units that are owned by SAA.

If a BRP was appointed this week - this should all be much clearer by February 2020.

The BRP and creditors can only make a clear call on that once they have the last 2 years financials in front of them, which hasn't been tabled yet. But which SAA auditors will have to table within 10 business days. Only with that in front of them can see see where profit/money has been lost and who is responsible for it.

If they stall that - they may have something to hide from the creditors and the BRP - if not, it will be made available in time.

[evanb]

SAAT may actually be a creditor of SAA, just like ATNS, ACSA, BidVest etc.

Mostly irrelevant if SAAT is a creditor to SAA since SAAT is 100% owned by SAA and its financial statements are fully consolidated in SAA's group financial statements.

[nomie]

https://www.fin24.com/Companies/Industr ... a-20191205

Les Matuson has been appointed as business rescue practitioner in South African Airways' voluntary business rescue process ...

active in this field for almost 35 years and has supervised and maximised recoveries in many large, high-profile corporate matters, including Ellerines ...

Dirk Hermann of union Solidarity told Fin24 on Thursday afternoon that organised labour was not very happy that a business rescue practitioner had already been appointed for SAA without consulting labour unions ...

some existing lenders to SAA would provide R2bn in post (business rescue) commencement finance guaranteed by the state and "repayable out of future budget appropriations in order for the business rescue process to commence and to enable SAA to continue to operate"

[snoopy]

SAAT may actually be a creditor of SAA, just like ATNS, ACSA, BidVest etc.

Mostly irrelevant if SAAT is a creditor to SAA since SAAT is 100% owned by SAA and its financial statements are fully consolidated in SAA's group financial statements.

If SAAT and Mango financials are all consolidated into SAA's financial statements as one annual report (then they are NOT separate legal entities in terms of the Companies Act) , it will still be possible to see who is not profitable. And who is losing the company (SAA) money as a business unit.

But anyway - it doesn't really help to speculate about what the BR plan is going to entail - only the BRP and creditors will know, how they want to go forward. Some may even want to sever their ties if they perceive a rescue is not viable. And could then demand liquidation or payment if what's due to them is payable by SAA.

At least if management (their actions and inactions) was responsible for stuffing up SAA, then right now - they cant make decisions on behalf of SAA anymore. Which is only a positive.

[snoopy]

South African Cabin Crew Association (SACCA) represents affected persons in the business rescue - if they aren't happy with the independence of the specific BRP appointment - he can be "fired". But they will have to bring evidence to prove their point, as to why the person does not qualify (why the BRP is not impartial).

The union's interference and other political interference with SAA operations, may also be deemed as one of the reasons of SAA's demise - if the BRP establishes that.

Opinion - I think SACCA is just trying to stall things...delay tactics (again). Instead of allowing this process to run its course within the time frame required in the Companies Act.

See Chapter 6 of the Companies Act.

The sooner this BR is decided on and the process gets rolling - go / or no go - the better for all at SAA.

A BRP incurs expenses in the execution of their duties and is specifically required in terms of s 141(2)(a)(ii) of the Companies Act to apply to court to discontinue the business rescue proceedings and to place such company into liquidation in the event that the business rescue practitioner determines that the company in business rescue cannot be rescued.

Delaying a BR plan is plain stupid in a company facing liquidation within 6 months (already established, as its a criteria to qualify for BR) - because it may lead to the above decision as the BRPs expenses forms part of the liquidation costs of a company. So delay tactics can force SAA into liquidation.

[Ray W]

From this morning's Daily Maverick

https://www.dailymaverick.co.za/article ... pens%20now

[Eddie Haynes-Smart]

From this morning's Daily Maverick
https://www.dailymaverick.co.za/article ... pens%20now

Excellent article! Succint! Really spells out the way forward ...

[Ray W]

From this morning's Daily Maverick
https://www.dailymaverick.co.za/article ... pens%20now

Excellent article! Succint! Really spells out the way forward ...

I agree - well written

[HJK 414]

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

[GL]

Media Release - UPDATE - SAA BUSINESS RESCUE PROCESS

SU

. Press the Enter key to open the contact card." style="unicode-bidi: embed; direction: ltr; text-align: left; user-select: text; cursor: pointer;">Sarah Uys <SarahUys@flysaa.com>

Fri 2019/12/06 09:31

Media Release

For distribution

 

SAA BUSINESS RESCUE PROCESS

 

JOHANNESBURG. 6 December 2019. The Board of Directors of South African Airways (SAA) has announced that the notice of commencement of business rescue proceedings was filed with theCompanies and Intellectual Property Commission (CIPC) on 5 December 2019, as per Chapter 6 of the Companies Act 2008 (Act 71 of 2008).

 

The company is officially in business rescue.

 

The CIPC has processed the appointment of the business rescue practitioner, Mr Les Matuson from Matuson Associates in South African Airways' voluntary business rescue process.

 

[GL]

What do we know about Les Matuson. Has he got any airline experience?

[Eddie Haynes-Smart]

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

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.