Business rescue process at SA Express Airways
The Department of Public Enterprises is concerned by the turn of events with the Business Rescue Process at the South African Express Airways SOC Ltd., where the Business Rescue Practitioners are planning to “ground” the airline without first presenting the shareholder and stakeholders with a comprehensive and feasible Business Case for the immediate stabilisation of the airline.
The Department represented by the Acting Director-General, Mr Kgathatso Tlhakudi and the Aviation Division, met with the Business Rescue Practitioners, Messrs Phahlani Mkhombo and Daniel Terblanche, this week, where they presented their business rescue plan.
The Department informed the practitioners that the Business Rescue plan presented was wholly inadequate and did not include key commercial elements that would enable the Department to make a business case for the provision of the Post Commencement Finance (PCF) to the National Treasury (NT).
The Department understands that the business rescue process needs the PCF to be fully operational. However, we have communicated to the practitioners that the Department is engaging with the NT to seek the PCF either in the form of a government guarantee or cash injection. In this regard, there is a work session planned for today (Friday, 06 March 2020) to discuss the PCF.
The Department has impressed upon the business rescue practitioners that the fiscus is constrained and notwithstanding the NT is fully engaged on the matter and understands the severity of the situation. In this regard, if a strategic equity partner (SEP) could be interested in investing in the airline, this option should be vigorously pursued.
The Department advice the practitioners to engage all stakeholders, the unions, board and management and tap into some of the skills that already exist in the business to develop the business case that can be proposed through engagements with potential PCF providers including National Treasury.
The practitioners have agreed and indicated that they will be devolving some operational and strategic responsibilities to management and Board of the airline.
The Department advised the Business Rescue Practitioners that the interim restructuring plan should include:
1. Restructuring options
2. Implications for fleet, routes, existing assets including repairs, staff, regulations and costs
3. Financial model
4. Funding options and
5. Branding recovery plan
The Department is of the view that there is still a rationale for SA Express to play a critical role as a feeder airline to service secondary routes and key cities in the Southern African Region, however the BRPs with Board and Management need to firm up the commercial case to enable funders to provide PCF.
For media enquiries:
Richard Mantu
072 488 1520.
