SAA Agrees to Hire Recovery Expert

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four engine jock
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SAA Agrees to Hire Recovery Expert

#1

Post by four engine jock » Thu Oct 05, 2017 8:39 am

South African Airways has agreed to hire a restructuring expert to help turn around the state-owned airline and help meet conditions laid down by lenders to roll over debt, according to two people familiar with the matter.

Incoming Chief Executive Officer Vuyani Jarana met with British industry veteran Peter Davies last month and he agreed to help try to return SAA to profit, said the people, who asked not to be identified as the plans are private. Davies is a former CEO of European airlines including Air Malta and Brussels Airlines and currently runs London-based consultancy Airline Management Group Ltd.

“We are finalizing steps that will lead to the appointment of a chief restructuring officer,” SAA spokesman Thali Thali said in emailed comments. “No announcement on the identity of the candidate can be made before we attend and resolve the outstanding issues.”

Davies didn’t immediately respond to a phone call and email seeking comment.

The appointment of a strong management team is one of several conditions lenders have laid down to extend talks on loan repayments beyond South African Finance Minister Malusi Gigaba’s mid-term budget update in October, the people said. One of those was a payment of 700 million rand ($51.5 million) to Citigroup Inc. as part of 1.8 billion rand of debt due to the U.S. bank by the at the end of September, which was released by the National Treasury along with funds for working capital on Friday.

Treasury confirmed the payment of 700 million rand to CitiGroup and directed further questions to SAA.

Debt Negotiations

A group of South African lenders led by Nedbank Group Ltd. -- including FirstRand Ltd., Standard Bank Group Ltd., Barclays Africa Group Ltd., and Investec Plc -- are prepared to negotiate a refinancing of debt through March 2019, the people said. In his mid-term budget update, Gigaba is expected to announce proposals intended to make SAA break even by about that date, including details of a recapitalization plan, they said.

Nedbank, which is leading the talks, doesn’t provide details of its banking relationships with its clients, a spokesperson said in an emailed response to questions.

SAA is one of several South African state-owned companies in need of urgent funding and government has said it needs a fresh management approach to stay in operation. The carrier hasn’t made a profit since 2011 and has been surviving off debt backed by state guarantees, while Jarana will become the company’s first permanent CEO since 2015 when he joins from wireless carrier Vodacom Group Ltd. on Nov. 1. The Treasury has considered trying to sell part or all of its 12 billion rand stake in phone company Telkom SA SOC Ltd. to help finance a bailout.

Cutting Routes

SAA said last week it would reduce flights to South African cities of Port Elizabeth and East London as part of its turnaround plan. The carrier will also scale back routes to Luanda, the capital of Angola, and Kinshasa in the Democratic Republic of Congo.

SAA is also working towards repatriating as much as $1 billion from Angola, Zimbabwe and Nigeria to help strengthen the balance sheet, according to two of the people. Money is trapped in those countries after exports collapsed leading to a shortage of hard currency.

Jarana brings private sector experience from his time at Vodacom and Davies has been identified due to his aviation expertise, one of the people

Davies took over Air Malta when it was making an annual loss of 70 million euros ($82 million) and made the airline profitable, according to his LinkedIn page. He also started Caribbean Airlines Ltd. in Trinidad and Tobago and made that carrier profitable as well.

https://www.bloomberg.com/news/articles ... conditions



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Re: SAA Agrees to Hire Recovery Expert

#2

Post by Raffles » Thu Oct 05, 2017 9:36 pm

Waste of time and more taxpayer money :ranting: :ranting: :ranting:



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Re: SAA Agrees to Hire Recovery Expert

#3

Post by avi-addict » Sat Oct 07, 2017 8:19 pm

Who is going to pay the expert for his advice???



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Re: SAA Agrees to Hire Recovery Expert

#4

Post by Propnut » Mon Oct 09, 2017 8:40 am

I am sure the few working South Africans will still be able to afford one simple expert's monthly tip. What they may not afford is his reasonably priced answers to SAA's state of affairs.

On a different note - I look at the expansion of CemAir from a single start-up Durban to Margate service, to what they offer now. Maybe SAA should dump the expert and follow their route of success. Mmmm. . . might be difficult to get the SA rugby team into a Cessna for a game



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Re: SAA Agrees to Hire Recovery Expert

#5

Post by Raffles » Mon Oct 09, 2017 8:07 pm

SAA had an "expert" before, Coleman Andrews, and he just helped trash it more. The govt has no business running businesses. They can't even carry out basic govt functions with any degree of competency, never mind the corruption. SAA must be privatized or simply shut down. The markets will pick up the routes and all the competent people will get jobs at other airlines. Having suffered many nightmares with SAA, I can just imagine the number of incompetent and unproductive employees it has. Trying to pull SAA back into shape would mean getting rid of them.



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