South African government agrees to fund SAA rescue, draft plan says

JOHANNESBURG, June 1 (Reuters) – The South African government has agreed to fund a restructuring of South African Airways (SAA), if a business rescue plan for the struggling state-owned airline is adopted, a copy of the draft plan showed on Monday.

SAA entered business rescue – a local form of bankruptcy protection – in December, after which administrators took over the running of the airline and have been working on a plan to save the business.

The draft plan said the government had agreed to make a working capital injection, which the administrators estimated at not less than 2 billion rand ($114.86 million), fund employee layoffs, which could cost up to 2 billion rand, and make an allocation of at least 600 million rand towards the repayment of general concurrent creditors.

A spokeswoman for the administrators confirmed the draft plan was genuine.

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