Government approves SAA rescue plan, appoints new interim CEO

The government of South Africa has given the green light to a rescue plan for the struggling national carrier, South African Airways (SAA), in a bid to save the airline from collapse. The plan, which could cost taxpayers up to R16.3 billion, is set to be a controversial move given the already substantial financial support provided to the airline over the past decade. The appointment of a new interim CEO, Phillip Saunders, is also part of the strategy to turn around the fortunes of the debt-ridden airline. The approval of the rescue plan comes after 86% of the creditors supported the agreement, with some unions initially opposing the plan but eventually coming on board. However, there are still concerns regarding the government's commitment to providing the necessary funding for the plan, with Minister Tito Mboweni being vocal about his reluctance to allocate further funding to SAA. One of the key points of contention is the amount of money required to implement the rescue plan, which is estimated at around R14.3 billion. This includes funds for severance packages and a government-guaranteed debt to banks that needs to be rolled over in the next year. While the government has indicated a willingness to provide some initial funding, the airline is expected to need more financial support to navigate through the current COVID-19 crisis and return to profitability in the next three years. Another crucial aspect of the rescue plan is the involvement of private sector equity partners to inject capital into the airline. While government officials have expressed confidence in securing strategic equity partners, there are doubts about the viability of attracting investors given the stringent conditions that may be imposed, including limiting government interference in the airline's operations. The timeline for the implementation of the rescue plan is also under scrutiny, especially in light of the ongoing global pandemic that has severely impacted the aviation industry. With other airlines like Qantas announcing a halt to international flights until March 2021, the challenges facing SAA in resuming operations and restoring profitability are substantial. The potential consequences of a failure to secure government funding for the rescue plan are dire, with experts warning that it could lead to the liquidation of the airline. This would not only incur significant financial costs but also have broader implications for the South African economy, as SAA plays a crucial role in providing essential transportation services and connectivity for the country. As the deadline for the government to deliver a funding commitment draws near, stakeholders are eagerly awaiting the outcome to determine the fate of SAA. The decision to support the rescue plan will have far-reaching implications for the future of the airline and the aviation industry in South Africa.