July 23, 2020 / 5:42 PM / 14 days ago

UPDATE 1-SAA rescue conditions met except state guarantee letter, administrators say

* SAA under bankruptcy protection since December

* Restructuring plan published last month

* Lenders need signed guarantee letter from government

* Administrators satisfied with promise to ‘mobilise funds’ (Adds detail, context)

By Alexander Winning

JOHANNESBURG, July 23 (Reuters) - All conditions for a rescue plan for South African Airways (SAA) have been met, apart from a guarantee letter lenders need from the government, the state-owned airline’s administrators said on Thursday.

The administrators will ask creditors at a meeting on Friday for the letter, stating that state guarantees will remain in force until the lenders’ claims are paid out in full, to be agreed by July 27, later than a previous deadline.

The administrators took over SAA in December after almost a decade of financial losses and published their restructuring plan for SAA last month, after repeated delays and fierce wrangling over the airline’s future.

Their plan envisages scaling back the airline’s fleet and shedding jobs, but it needs at least 10 billion rand ($600 million) of new funds to work, and the government has not yet said where it will find the money.

Finance Minister Tito Mboweni said in court papers this week that he had not promised state funds for the rescue plan and that the government was still exploring options like approaching institutions to invest pension funds.

The Department of Public Enterprises, the ministry responsible for SAA, has said it is speaking to potential partners.

There had been speculation that the administrators would need a firmer commitment from the government that funding would flow soon, but on Thursday they said the government’s commitment to “mobilise funds” was enough for the plan to work.

$1 = 16.6139 rand Editing by Jane Merriman and Elaine Hardcastle

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