South Africa’s main opposition party has leaked a draft business rescue plan for embattled flag carrier South African Airways that could see the government plough 4.6 billion Rand (USD $263.44 million) into the heavily loss-making airline. The proposal suggests the resurrected ‘new’ South African Airways (SAA) could lose over $1 billion in its first three years of operation.
The airline was placed into a form of bankruptcy protection, known as business rescue late last year but plans to restructure the airline were marred in controversy over plans to retrench of much of the airline’s workforce. The COVID-19 pandemic brought matters to a head and the two business rescue practitioners had suggested winding up the company to avoid further losses.
The South African government, which had previously shied away from offering a bailout for the country’s largest airline then changed its stance and asked the BRP’s to look at starting a new airline with government support.
Those proposals were leaked on Monday by the Democratic Alliance party who are unhappy with the incumbent government’s plan to plough more public money into South African Airways.
“Given that it is a draft and has not received agreement or comment from any of the relevant affected persons we will not comment on the leaked draft to the media and will await input from the affected parties as is prescribed by the Companies Act,” a spokesperson for the BRP’s said in a statement.
“To assume and comment on this draft as if it is the final version would be very irresponsible,” the statement continued. A spokesperson said the BRP’s would publish the final proposal as soon as possible. The government has given until June 8 for the finished proposal to be ready.
The Democratic Alliance called the idea of a government bailout for SAA “insanity”, saying the only viable option was to liquidate the airline.
