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SAA bailout in the balance? BRPs put airline operations on hold

29 September 2020 7:49 PM
Tags:
South African Airways
SAA
SAA bailout
The Money Show
Bruce Whitfield
Mango
Guy Leitch
Peter Attard Montalto
SAA business rescue

SAA's business rescue practitioners decide to suspend airline operations. Bruce Whitfield gets comment from the experts.

South African Airways' business rescue practitioners (BRPs) announced on Tuesday evening that all airline operations have been suspended with immediate effect.

The airline is being placed "under care and maintenance" until funding discussions are completed.

© brians101/123rf.com

Bruce Whitfield says he's been told by the BRP's public relations team however, that not all flights are grounded:

"There are still repatriation flights that are happening, cargo flights, and World Food Programme flights are still being undertaken."

But this is SAA in its death throes unless some magic money tree gets shaken really soon!

Bruce Whitfield, The Money Show host

RELATED: We’ll find the money (R10.5bn)! We won’t allow SAA to die – Public Enterprises

Bruce Whitfield gets comment from Guy Leitch (Managing Editor of SA Flyer Magazine) and Peter Attard Montalto | (Head of Capital Markets Research at Intellidex).

I think that at this stage there is absolutely no gold left in the ground at SAA, only perhaps fool's gold!

Guy Leitch, Managing Editor - SA Flyer Magazine

The story from the BRPs was that they did try and show that certain progress (an interesting word) is being made in terms of mobilising or raising the necessary R10.5 billion [which is not enough]. Until that is actually firm, then they are going to put the airline under care and maintenance - essentially grounded.

Guy Leitch, Managing Editor - SA Flyer Magazine

It seems from the business rescue practitioners' release today that they're still not convinced at all. There's been more news coming out in the last few days that banks are happy to fund the closing down of the old SAA but not a new SAA.

Peter Attard Montalto, Head of Capital Markets Research - Intellidex

It sounds very dramatic but I think it means that there's absolutely no change because as you pointed out they are continuing to operate the repatriation and cargo flights - that's basically all the airline is doing anyway.

Guy Leitch, Managing Editor - SA Flyer Magazine

Leitch points out that Mango is not part of the business rescue process and that flights should continue, as long as SAA's technical division allows this.

What we've seen is this extraordinary sight of a couple of old ancient Airbuses flying Mango passengers because there's a fight going on... about payment of bills...

Guy Leitch, Managing Editor - SA Flyer Magazine

The real question, he says, is whether government will come up with the necessary funding.

It's hard to imagine that given enough political will they won't, eventually, because the banks might... be prepared to lend at something like prime plus five with the preferential creditor status of a government guarantee.

Guy Leitch, Managing Editor - SA Flyer Magazine

There are many options and many models globally of how you can run a national airline with minimal state or maximal state involvement.

Peter Attard Montalto, Head of Capital Markets Research - Intellidex

Leitch says in light of the pandemic, ideally a state-owned carrier would be used eventually to transport vaccines.

But still, SAA would have to be sustainably run.

Listen to the in-depth interviews in the audio below:


29 September 2020 7:49 PM
Tags:
South African Airways
SAA
SAA bailout
The Money Show
Bruce Whitfield
Mango
Guy Leitch
Peter Attard Montalto
SAA business rescue

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