It’s crunch time for state-owned South African Airways (SA, Johannesburg O.R. Tambo), as the country’s government appears to run out of time to rescue the embattled airline.

The government had until today (September 17, 2020) to provide urgently needed funding for the restructuring of SAA and the implementation of its business rescue plan.

The airline’s administrators say the anticipated funding has not been received, and have called an urgent meeting of creditors for September 18, 2020, to decide on the airline’s future.

The Department of Public Enterprises, in response, said the government was still trying to secure the money and was working with transaction advisors to assess proposals from several potential strategic equity partners for the airline. “Efforts to locate funding sources continue,” it said in a statement. “We call upon employees and the creditors to be patient while we conclude the efforts to find a constructive outcome.” Amongst other things, the key to solving SAA’s difficulties was to secure “a credible strategic equity partner who can introduce the required technical, financial, and operational expertise into the business,” it said.

The administrators last week warned the airline’s short-term funds were running out and that the business rescue was at risk if the government did not provide the requisite funding this week. They need at least ZAR5 billion rand (USD300 million) in working capital, as well as to pay severance packages, and post-commencement creditors, before they can discharge the airline from business rescue.

Creditors end-July adopted the business rescue plan after the government committed to “mobilising” the required money. So far, the government has advanced about ZAR9.3 billion (USD557 million) of ZAR16.4 billion (USD900 million) to repay various lenders; and has engaged Rand Merchant Bank to assess "unsolicited expressions of interest from private sector funders, equity investors and strategic partners". Last week, it claimed to have engaged with potential partners and expressed confidence that it would find a long-term investor for SAA.

SAA has been in business rescue since December. It needs at least ZAR10 billion (USD598 million) over the next three years to implement the business rescue plan.

Editorial Comment: Updated with comment from the South African government. - 17.09.2020 - 15:33 UTC