South African Airways Responds to Liquidation Reports
The management of South African Airways has responded to the news making the headlines about a possible liquidation of the airline should it fail to successfully conclude the strategic equity partnership with the Takatso Consortium.
In a statement signed by its Chairman, John Lamola, the airline said that the media reports were out of context, exaggerated, and blown out of proportion. Read the full text below.
"We noted today’s news reporting centred around remarks made by the Acting Director General of the Department of Public Enterprises, Ms Jacky Molisane on the future of SAA in relation to the prospects of the successful closure of the implementation of the strategic equity partnership with the Takatso Consortium.
The news that SAA will be liquidated if the SEP transaction is not concluded has been taken out of context, and the import of the statement made by the Acting DG is exaggerated and blown out of proportion.
Elsewhere, Ms Molisane is quoted saying that “if the deal falls through, if the government cannot put more money into SAA, then the option we have all worked hard to avoid would have to be taken and that is the liquidation of SAA”.
We are in constant contact with the Acting DG. Her views, which are based on a continuous management of all the regulatory, legal and commercial processes common to transactions of this nature are aligned with those of the Board of SAA.
The SAA Board is constantly monitoring and assessing the corporate risks associated with this transitional period SAA is going through.
On Wednesday 21st September 2022 SAA and the DPE were making a scheduled presentation to Parliament’s Portfolio Committee on Public Enterprises on SAA’s 2017/18 annual financial statements.
An ancillary question related to the progress on the SEP transaction in relation to funds outstanding from National Treasury for the conclusion of SAA’s Business Rescue Plan, answered by the Acting DG, led to a press story casting an impression that the future of SAA is in peril.
Typical of normal corporate governance protocols, a high-level risk management process involving both the DPE and SAA Board has been put in place to charter the future of SAA since the airline emerged out of Business Rescue with a restructuring solution that entails the introduction of a private strategic equity partner to this State-Owned-Company. The transaction is beset with delays emanating from legal requirements to comply with aviation regulatory conditions, and the Competition Commission.
We can confirm that both SAA and the DPE are working on a time horizon of end of March 2023 for the substantive conclusion of the transaction, as this period marks a reportable end of current financial year 2022/23 for SAA.
Since the relaunch of the airline operations in September 2021 the Board has tasked SAA management to run the airline as a fully-fledged airline in compliance with legally imposed safety requirements, and as a business enterprise competing for its market share and profitability.
In addition, in line with the requirement of the Public Finance Management Act, SAA had to prepare and submit a 3-year Corporate Plan to National Treasury.
As the airline celebrates its full year of successful operations, we are more than satisfied that we have built the foundation for a sustainable and growing airline business.
The loyalty of our customers has been restored, the rest of Africa is proud to see SAA back in the skies, we are currently implementing plans to increase our fleet of aircraft, and with our corporate partners we are modernizing our customer experience offering, including the renovation of our airport lounges.
We have also successfully increased our code-share partnerships and deepened SAA’s standing with the global Star Alliance network and the International Air Transport Association (IATA).
Executing its fiduciary responsibilities in relation to judicious and prudential risk management, as enjoined in both the PFMA and the Companies Act 71 of 2008, the Board of SAA has over time being seized with the task of simulating a number of scenarios on the future of the airline.
The outcomes of this risk management exercise is what has invigorated SAA management into its current single-minded focus of working for an operationally and financially successful airline.
The fact that the delays in the National Treasury’s provision of the reported R3.5 billion have not negatively affected the life and growth of the restarted airline bears testimony to the resilience of SAA’s current business model.
The SAA Board will do everything in its power to ensure SAA survives. As a company with an overhead cost structure and operating model that have been restructured by the Business Rescue process, and a transformed management culture, SAA is poised for a sustained growth.
SAA management assures that there is a variety of resources within the company and the global aviation industry that can be innovatively exploited for the future success of SAA. We assure our customers and all our stakeholders and partners that there are no plans, nor an intention to see South African Airways liquidated."
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