South African President Cyril Ramaphosa said today that South African Airways (SAA) had to be placed on “business rescue” because there was no other viable and financially workable option to secure a credible future for the state-owned airline, Reuters reported. SAA has been posting losses since 2011 and is deeply in debt. It has received more than 20 billion rand ($1.4 billion) in government bailouts over the past three years, which has achieved little more than keeping it barely afloat. Ramaphosa ordered SAA on Wednesday to seek a business rescue as the airline is close to collapse.
South Africa’s government will cede control of the national airline to a restructuring specialist in a last-ditch attempt to save the cash-strapped business from collapse, Reuters reported. As part of a rescue plan started on Thursday, the government will hand the running of South African Airways (SAA) to business rescue practitioner Les Matuson to make the sort of painful cuts that would be difficult for politicians to push through.
South Africa’s government will place the national airline under a local form of bankruptcy protection as a last-ditch measure to try and prevent its total collapse, Bloomberg News reported. President Cyril Ramaphosa made the decision in order to address the dire financial situation at South African Airways, Cassius Lubisi, the secretary to the cabinet, said in a letter to ministers and deputy ministers that was circulated unofficially. Two ministers, who spoke on condition of anonymity because the decision hasn’t been made public, confirmed its authenticity.
Nigeria’s banking industry is opening the lending taps to avoid penalties, bowing to central bank demands to unlock credit to help revive the economy, Bloomberg News reported. Banks raised their loan-to-deposit ratio to 64% in the third quarter, one percentage point shy of the minimum target imposed by the central bank, according to Bloomberg calculations using quarterly banking data released by the National Statistics Bureau. The monetary authority gave banks until the end of the year to meet the threshold or hand over half of the shortfall to the central bank without earning interest.
South African Airways is in talks with lenders including Standard Bank Group Ltd. and Investec Ltd. about funds to alleviate a cash crunch brought on by persistent losses and a week-long strike, according to people familiar with the matter, Bloomberg News reported. Negotiations are also taking place with Absa Group Ltd., Nedbank Group Ltd. and FirstRand Ltd.’s Rand Merchant Bank, said the two people who asked not to be identified as the discussions are private.
Cell C Pty Ltd.’s creditors aren’t giving up on a takeover offer from rival Telkom SOC Ltd., which South Africa’s third-largest mobile-network operator rejected last week, Bloomberg News reported. Senior debt holders have hired investment-banking firm Moelis & Co. and corporate lawyers Linklaters LLP and DLA Piper LLP to lobby for the Telkom proposal, people familiar with the matter said.
South African Airways said it’s waiting for the government to tell it whether it will provide the national carrier with the money needed to keep flying, rendering it unable to publish its results for the year through March, Bloomberg News reported. “SAA cannot finalize its annual financial statements within the prescribed time until the going concern status is confirmed,” the carrier said in a document submitted to lawmakers on Monday and circulated by the main opposition Democratic Alliance.
Speculation that South African Airways is in danger of going under could become self-fulfilling. The national carrier has been given 57 billion rand ($3.9 billion) in bailouts since 1994 and last made a profit in 2011, Bloomberg News reported. The company’s already precarious finances took another hit last month when workers staged a week-long strike that grounded a number of flights, and customers have canceled bookings on others.