The future of South African Airways (SA, Johannesburg O.R. Tambo) has been thrown into further doubt after the South African Treasury reaffirmed that it had no intention of dolling out more public funds to the bankrupt state-owned carrier.

In a presentation before the Standing Committee on Finance and the Select Committee on Finance last week, Treasury recommended that SAA should be closed and that "no further action" was "required in terms of bailouts" except settling "guaranteed debt, as the entity is insolvent and BRPs have not released turnaround plans."

SAA's business rescue practitioners (BRPs) have hinged their turnaround plan on the government coming up with a total of ZAR10.3 billion rand (USD597.8 million) in funding by July 15. of the sum, ZAR2.8 billion (USD162.5 million) would be used for working capital, ZAR2.2 billion (USD127.7 million) would be used for retrenchments, ZAR3 billion (USD174.1 million) would go towards reimbursements for unflown tickets, ZAR600 million (USD34.8 million) would go towards general concurrent creditors, and ZAR1.7 billion (USD98.7 million) would be left to lessors.

However, a creditors' vote on approving the plan has already been postponed until July 14 to allow the BRPs more time to consult with creditors as well as labour unions. So far, the plan has received mixed reviews with Numsa, Sacca and the SAA Pilots' Association, coming out against both the business plan and the voluntary severance packages.

Against the backdrop of a no-confidence vote in the plan, the Department of Public Enterprises (DPE) has warned that the process of winding down the airline and disposing of its assets will lead to financial hardship for employees and a substantial undervaluation of assets.

"The SAA Business Rescue Practitioners (BRPs) have scheduled a creditors' meeting for Tuesday, July 14th to vote on the business rescue plan. A vote in favour of the plan by 75% of the voting interests would be required to carry the vote. A vote against the plan would result in the protracted and costly liquidation of the airline," it warned.

Should SAA go into liquidation, the BRPs have projected that preferent creditors such as the South African Revenue Service (SARS), employees, post-commencement financing repayments (PCF), and suspended lease payments would see 98 cents on the rand in terms of debt repayment. A total disbursement of ZAR2.457 billion (USD144.53 million) against claims of ZAR2.496 billion (USD146.83 million) is expected. However, concurrent creditors, which include South African banks, passengers, pension funds, and lessors, all of whose claims total ZAR24.823 billion (USD1.46 billion), would recover nothing.