South African Air to hire experts to spur economy

Bloomberg

South African Airways has agreed to hire a restructuring expert to help turn around the state-owned airline and 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 return SAA to profit, said the people, who asked not to be identified. 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 finalising steps that
will lead to the appointment of a chief restructuring officer,” SAA spokesman Tlali Tlali said.
“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 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 US bank by the end of September, which was released by the National Treasury along with funds for working capital.
Treasury confirmed the payment of 700 million rand to Citigroup and directed further questions to SAA.
A group of South African lenders led by Nedbank Group Ltd.—and 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 recapitalisation plan, they said.
Nedbank, which is leading the talks, doesn’t provide details of its banking relationships with its clients, a spokesman said in an emailed response to questions.
SAA is one of several South African state-owned companies in need of urgent funding and the
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.
Jarana will become the company’s first permanent CEO since 2015 when he joins from wireless carrier Vodacom Group Ltd. on November 1. The Treasury has considered selling part or all of its 12 billion rand stake in phone company Telkom SA SOC Ltd. to help finance a bailout.