Business rescue practitioners at South African Airways describe as “reasonable” the prospects of rescuing the struggling carrier, though stress this is dependent on the necessary funding. In an update issued to “affected parties” today, the joint business rescue practitioners appointed to oversee the carrier after it entered formal restructuring late last year, say they are now holding discussions with the airline’s shareholder - South Africa’s public enterprises ministry - to possibly restructure the airline. ”An announcement in this regard will be made in due course as well as an agreed timeline for the consultation on the business rescue plan as well as its publication,” they say. ”It is the considered view of the business rescue practitioners that there is still a reasonable prospect of rescuing SAA, subject to the receipt of unequivocal commitment thereto and the requisite funding. This will be set out in the business rescue plan to be published in due course.” In a wide-ranging update, the business rescue practitioners also say the airline has been granted leave to appeal a labour court ruling which backed the NUMSA and SACCA unions bid to prevent planned staff cuts. The airline told staff it does not have sufficient funds ”to continue honouring the obligations of SAA to its employees” beyond 30 April and has placed all staff on unpaid absence with effect from 1 May. It says staff continuing to work to operate the airline’s limited repatriation and cargo flights are being remunerated. The practitioners note a forum comprising the public enterprises ministry, unions and non-unionised bodies at the airline proposed pay cuts for May. ”However, SAA does not have sufficient funds available to pay salaries to all of its employees and, in fact, does not have sufficient funds to pay certain of its post-business rescue costs,” the administrators say. The update also addresses the roughly R10 billion ($572 million) utilised in running the airline in the five months ending April 2020. This figure was highlighted during evidence given to a parliamentary committee on 15 May. “Contextually, it is worth noting from the 2017 financial statements and the draft financial statements for 2018 and 2019 that the operating costs for SAA were at least R30 billion per annum amounting to an spend of R2.5 billion per month,” it says, noting it has cut operating costs by around R500 milion a month. Earlier today, the administrators called into question an SAA statement that it hoped to resume domestic flights in the middle of June, saying the cessation of flights “remains as is until SAA has a better sense of what the Level 3 lockdown means in terms of domestic air travel”.

Source: Cirium

Ecuador's government has announced the closure and liquidation of most major public companies, including state-owned airline TAME. The nation's president Lenin Moreno linked the measure to the economic situation created by the Covid-19 pandemic, which has hit Ecuador particularly hard. Marco Avila, president of state holding company Empresas Publicas, says that while the pandemic ultimately made TAME's situation unsustainable, its future was questionable even before the current crisis. Transport minister Gabriel Martinez notes that TAME "reported losses in nine of the last 12 years" and puts the airline's accumulated debt load at $311 million. "This year we planned for a net loss of $45 million, but this figure would be vastly higher because of the coronavirus-caused traffic collapse," he adds. The liquidation of TAME and other state assets will be assessed during a first phase in which debts and labour obligations will be addressed. After four to six months, the corporations will enter their respective liquidation processes. TAME, founded in 1962 as an airline owned and operated by the air force, became a civilian government-owned airline a decade ago to comply with ICAO safety-oversight regulations. After giving up most international routes, selling its Embraer 170, and returning to the lessor its sole Airbus A330 widebody, used for flights to New York in recent years, the airline until March 2020 continued operating a network of 11 mostly domestic destinations with three ATR 42-500 turboprops and a pair of Airbus A320-family narrowbodies. It also operates several single-engined aircraft to remote airfields in the Amazonas region. TAME held a 34% domestic market share. Transport minister Martinez says $16 million has been reserved for severance packages for all 932 TAME employees and that "no destination will lose its air connectivity" as the consequence of the airline's final grounding. LATAM Ecuador has already confirmed plans to launch operations to Santa Rosa and Loja, and the minister says "negotiations to operate flights to Esmeraldas and Lago Agrio are under way with Avianca Ecuador and [Cuenca-based, currently inactive] AeroRegional". For any destinations that cannot be served by a commercial airline, a special social-services operation will be established.

Source: Cirium

LATAM Airlines Group has filed for US Chapter 11 bankruptcy protection for its affiliates in Chile, Colombia, Ecuador, Peru and the USA. The group's units in Argentina, Brazil and Paraguay are not included in the filing. The Santiago, Chile-based airline group says it plans to "transform its business" under bankruptcy protection and has secured $900 million in additional financing from shareholders Qatar Airways and Cueto Group. Qatar Airways acquired a 10% stake in LATAM in 2016. A further 20% of the group is held by Delta Air Lines, which invested $1.9 billion in the Latin American group in September 2019. There is no mention in LATAM's 26 May statement of any additional planned investment by Delta, but the group says it would "welcome other shareholders interested in participating" in the process, "to the extent permitted by law". The Chapter 11 process will provide LATAM and its affiliates with an "opportunity to resize their operations to the new demand environment", says the group, "enabling them to emerge more agile, resilient and sustainable". The group's airline will continue operating passenger and cargo flights, "subject to demand and travel restrictions", throughout the reorganisation process. "LATAM entered the Covid-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand,” states LATAM chief executive Roberto Alvo. “We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option to lay the right foundation for the future of our airline group." Employees will continue to receive their salaries throughout the reorganisation process and suppliers will be paid "in a timely fashion" for goods and services delivered from 26 May onwards. The Chapter 11 process will enable LATAM to "meet its obligations while comprehensively managing its fleet and addressing its debts", most of which are held in the USA, says the group. LATAM's management team will remain in place throughout. While most of LATAM's affiliates are included in the reorganisation process, divisions in Argentina, Brazil and Paraguay are not as a result of "the nature of their debt structure and current financial status", says the group. However, these three units will "continue to operate", says LATAM. It adds that it is in discussions with the Brazilian government about "financial support" for its operations in the country.