South Africa urges support for SAA rescue but allocates no new funds
By Alexander Winning JOHANNESBURG (Reuters) - The South African government on Wednesday urged creditors to back a restructuring plan for South African Airways (SAA) but did not allocate new bailouts for the loss-making state airline in an emergency budget.
By Alexander Winning
JOHANNESBURG (Reuters) - The South African government on Wednesday urged creditors to back a restructuring plan for South African Airways (SAA) but did not allocate new bailouts for the loss-making state airline in an emergency budget.
Creditors are due to vote on the plan on Thursday, after a court application by private airline Airlink to block the vote failed.
The rescue package, published last week by SAA's administrators after months of delays and wrangling, proposed the government find at least 10 billion rand ($575.6 million) of new funds to pay some creditors, fund thousands of layoffs and restart the airline as COVID-19 travel restrictions ease.
It also suggested scaling back the airline's fleet while keeping most of its routes and set a deadline of July 15 for the government to give a commitment on funding.
The Department of Public Enterprises (DPE), the ministry responsible for SAA, said it believed approval of the plan "would help creditors and employees to be co-creators of a new airline".
But the lack of extra funding in Wednesday's supplementary budget - beyond the 16.4 billion rand set aside in February - makes the outlook for SAA highly uncertain.
The DPE said on Tuesday it had received unsolicited proposals from private sector funders, private equity investors and partners about participating in a new airline based on SAA.
But it has not named any of the potential investors, and some analysts are sceptical anyone would put cash into SAA without a government backstop given its longstanding frailties.
SAA has not made a profit since 2011 and has consumed more than 20 billion rand in bailouts in the last three years alone.
DPE acting Director General Kgathatso Tlhakudi said on Wednesday it was not essential for the government to retain management control in a restructured SAA.
"If we find the right partner who is prepared to inject the technology and access to markets that we require for the airline, and they are seeking management control, we are quite comfortable to let go of that," he told local radio station 702.
The DPE sent a voluntary severance package offer to trade unions on Tuesday, saying the restructuring could cost 3,620 jobs.
It said the offer, which includes one week of severance pay per year of service, one month of paid notice and a potential top-up payment, was final and agreement was important to avoid liquidation.
($1 = 17.3732 rand)
(Editing by Olivia Kumwenda-Mtambo and Barbara Lewis)
This story has not been edited by Firstpost staff and is generated by auto-feed.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.
By Foo Yun Chee BRUSSELS (Reuters) - The European Union's executive on Friday wrapped up preliminary talks with French drugmaker Sanofi aimed at securing its COVID-19 vaccine for the 27-country EU bloc, the latest deal with vaccine producers. Armed with an emergency fund of more than 2 billion euros ($2.4 billion), the European Commission wants to strike deals with up to six drugmakers for their vaccines for their 450 million citizens against the coronavirus that has killed 674,000 people worldwide
By Lucia Mutikani WASHINGTON (Reuters) - U.S. consumer spending increased for a second straight month in June, setting up consumption for a rebound in the third quarter, though the recovery could be limited by a resurgence in COVID-19 cases and the end of expanded unemployment benefits.
By Steve Holland and Daphne Psaledakis WASHINGTON (Reuters) - The United States intensified its economic pressure on China's Xinjiang province on Friday, imposing sanctions on a powerful Chinese company and two officials for what it said were human rights abuses against Uighurs and other ethnic minorities. The move, the latest blow to U.S.-China relations, came a week after U.S