South African Airways administrators said they will decide within the next week whether to sell or liquidate the insolvent carrier if 10.5 billion rand ($620 million) pledged by the government fails to be delivered.
The business-rescue practitioners have placed SAA under care and maintenance in the meantime, suspending all operations, while they wait for the state to come up with the required package, according to a letter to creditors sent on Tuesday.
“Certain funders have indicated a willingness to provide a portion of the funding” subject to certain conditions, the administrators said, without giving further detail. How to proceed if a cash injection doesn’t come to fruition may include a sale of the carrier or its assets, with liquidation another option, they said.
The fate of SAA has become an emotive topic in South Africa as the country struggles to recover from Covid-19 and an economy that was in recession even before the virus hit. Public Enterprises Minister Pravin Gordhan has made the resuscitation of the airline a major priority, but Finance Minister Tito Mboweni has made clear he does not support further bailouts with limited state funds needed elsewhere.
The National Treasury said in July it would help “mobilize” funding, and Gordhan’s Department of Public Enterprises has repeatedly claimed to have received numerous approaches from interested private backers. Yet no formal offer has been placed more than two months later, and it’s not clear whether backing will be secured, despite some interest from Ethiopian Airlines Group.
The Treasury wants strict conditions attached to any guarantees it provides for loans to SAA, two people familiar with the matter said this week. President Cyril Ramaphosa has backed the airline’s rescue, they said.
SAA will fly the cargo and repatriation flights it has already committed to but won’t accept any more for now, a spokeswoman for the administrators said.
South Africa is due to open its international border for commercial flights from 1 October, more than six months after closing them to contain the coronavirus.
By Roy Cokayne for IOL
The South African Bureau of Standards (SABS) has been placed under administration.
This is after Trade and Industry Minister Rob Davies last month removed the entire SABS board because he had lost faith in its ability to effectively manage the bureau.
In May this year, Davies confirmed that the bureau was bleeding customers and potential revenue and in March this year he instructed its management to urgently oversee a detailed process to develop a turnaround strategy.
Davies on Friday announced the appointment of three SABS co-administrators, SABS group operating officer Jodi Scholtz, the deputy director-general of the Industrial Development Division at the Department of Trade and Industry (dti) Garth Strachan, and the chief director of technical infrastructure institutions at the dti, Tshenge Demana.
He said the co-administrators were charged with producing a diagnostic report and turnaround action plan.
They hade been appointed for the period from July 2 this year until January 30 next year and in terms of the provisions of the Public Finance Management Act, they had been given all powers and duties necessary or incidental for the proper functioning of the SABS. Sidwell Medupe, a spokesperson for the dti, on Friday confirmed that SABS chief executive Boni Mehlomakulu, who as chief executive was a member of the bureau’s board, had been dismissed as a board member, along with the other board members. Medupe also confirmed that Mehlomakulu now reported to and took instructions from the co-administrators.
The SABS last year reported a R44.3 million loss for its 2016/17 financial year.
The SABS has been in the spotlight since it emerged that it irregularly certified substandard coal by Guptalinked mines to facilitate the suspension imposed by Eskom on another supplier to pave the way for the Gupta-owned Tegeta contract to go ahead.
However, the problems at the SABS go much deeper than that and it has received widespread criticism in the past few years from many industries about the level of service these industries were receiving from the bureau.
Business Report reported in January last year that South Africa’s coatings industry claimed the SABS’s paint testing laboratories appeared to be non-operational.
The Master Chemical Blenders Association, which collectively represents more than 50 companies, last year told Business Report that their members were unable to get their compliance certificates from the SABS, despite interacting directly with Mehlomakulu and that the SABS did not have testing capability and that many were possibly no longer compliant.
The SA National Accreditation System (Sanas), which is responsible for accrediting industry bodies and laboratories that conduct testing and is recognised through legislation as the only national body responsible for carrying out accreditation, suspended the certification programmes of the SABS, but subsequently lifted this suspension in March 2016, claiming the suspension was of an administrative nature.
Complaints Many other industries have complained to Business Report about the level of service provided by the SABS. Davies last month confirmed that he had received many complaints from both big and small business, including complaints from black industrial players, that the government was working hard to expand, about the lack of service from the SABS.
Davies confirmed in response to a parliamentary question in May that the SABS had lost 1 052 customers since its 2015/16 financial year, including 401 customers since April this year, resulting in a loss of revenue to the bureau of almost R50m in this period.
In addition, the SABS had to refund 41 customers a total of R1.03m in this period.
Davies said the peak in customer losses was in the SABS’s 2016/17 financial year, due to customers cancelling their permits and certificates with the SABS.
The reasons for the cancellations included the suspension of SABS certification programmes by Sanas; customers moving to competitors; and expired certificates and permits.