South Africa: SAA's Fate Lies in Hands of Corporate SA

analysis

The future of SAA is now out of government's hands and firmly in those of the private sector, for better or for worse.

It was inevitable, but it still came as a shock -- the meddlesome Department of Public Enterprises stood back long enough to allow the SAA board to apply for voluntary business rescue, a process that was completed on Thursday 5 December 2019.

The board is now in the process of appointing a business rescue (BR) practitioner, who will resume duties immediately.

This puts to bed the vexed question of just who is in charge at SAA. The acting CEO, executive chair, board and shareholder minister all defer to the BR practitioner.

Within 10 working days, a meeting must be held where creditors prove their claims against the airline. This provides a very clear idea of the liabilities.

Within six weeks, the BR practitioner must present a turnaround plan to creditors, though he or she could apply for a slight extension.

This plan must be approved by 75% of creditors and 50% of the company's independent creditors, which excludes the shareholder.

This gives creditors, presumably the private sector, enormous power over the future of SAA.

If the plan...

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