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South African Airways Exits Bankruptcy: Now What? | One Mile at a Time

South African Airways (SAA) is emerging from business rescue, yet oddly the national carrier’s future doesn’t seem any more certain.

SAA emerges from business rescue after 17 months

In December 2019, SAA entered business rescue. This is essentially a form of bankruptcy protection, whereby an administrator takes control of the company, with the goal of maximizing the odds of survival for the airline, or at least achieving as good of a return for creditors as possible.

It’s worth remembering that all of this happened pre-coronavirus, as the inefficient national carrier has been struggling since long before the pandemic.

After 17 long months, SAA has finally emerged from business rescue. With this, SAA is now considered to be solvent, and administrators have “effectively discharged the business rescue and handed over the operations of SAA back to its board and executive team.”

The government has stated that it’s in the final stages of negotiations with a preferred equity partner for the airline:

“A purchase and sale agreement should be concluded in the next few weeks. This will enable capital, and much-needed technical and commercial expertise to be brought in to ensure a competitive flag carrier emerges.”

South African Airways is emerging from business rescue

So what happens next?

In the past we’ve seen airlines enter and exit business rescue while more or less operating as usual. So while SAA is now considered solvent, no one really knows what the future holds for the airline:

So it’s great that SAA’s debt issues have been addressed, but now the airline is going to need some capital if it can actually be transformed into a viable business. Given the carrier’s track record, and the government’s inability to simply left the airline fail, one has to wonder what investors want to come in and help the airline out.

This truly seems like one of those situations where they would have been better off letting the airline liquidate, and…

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