A&O and ENSafrica lead on South African Airways rescue

South African Airways was placed under a state-led rescue plan on Thursday as part of a massive restructuring following a costly week-long strike last month.

Thousands of South African Airways (SAA) staff walked out on November 15 after the cash-strapped airline failed to meet a string of demands, including higher wages and job in-sourcing.

The strike was called off the following week after SAA management and unions eventually clinched a deal.

But the walkout dealt a severe blow to the debt-ridden airline, which has failed to make a profit since 2011 and survives on government bailouts.

“The Board of SAA has adopted a resolution to place the company into business rescue,” said a statement by South Africa’s Public Enterprises Minister Pravin Gordhan, adding that the decision was also supported by the government.

“It must be clear that this is not a bailout,” said Gordhan. “This is the provision of financial assistance in order to facilitate a radical restructure of the airline.”

South Africa is struggling to get state-owned companies back on track after nine years of corruption and mismanagement under former president Jacob Zuma.

– Costly strike –

Its national airline — which employs more than 5,000 workers and is Africa’s second largest airline after Ethiopian Airlines — had been losing 52 million rand ($3.5 million) a day during the strike.

SAA’s board said the business rescue, scheduled to start immediately, was decided after consultations with shareholders and the public enterprises department “to find a solution to our company’s well-documented financial challenges”.

“The considered and unanimous conclusion has been to place the company into business rescue in order to create a better return for the company’s creditors and shareholders,” said the SAA board of directors in a statement.

airbus enquiry

Serious Fraud Office starts Airbus inquiry

UK opens investigation into fraud, bribery and corruption allegations in connection with aircraft sales

The UK’s Serious Fraud Office has confirmed that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the commercial airline business of Airbus, the defence and aviation firm. The investigation into potential criminal dealings in the sale of commercial planes was launched in July but revealed at the weekend by the European manufacturer.

The SFO said that the allegations related to irregularities with third party consultants. Airbus said it had flagged up the suspect activity itself, effectively self-reporting to the SFO via UK export agencies, and was cooperating fully with the investigation.

In a statement issued on Sunday, Airbus said: “Airbus Group has been informed by the SFO that it has opened a criminal investigation into allegations of fraud, bribery and corruption in the civil aviation business of Airbus Group relating to irregularities concerning third party consultants. Airbus Group continues to cooperate with the SFO.” Neither Airbus nor the SFO would comment further on the details.

Earlier this year, a UK government agency suspended the issue of export credits to Airbus, due to discrepancies in declarations by the manufacturer on the use of outside intermediaries during jet sale negotiations. Airbus said it had flagged up the mistakes and omissions relating to applications for export credit financing for its customers.

The agency, UK Export Finance, had said it was referring the discrepancies to the SFO, which would decide whether to launch a criminal investigation. French and German agencies have also halted the plane-maker’s export credits, which support deliveries to airlines with limited access to commercial funds.

This month, Airbus’s group CEO Tom Enders said they were hopeful that export credits would be restored by the end of the year. Airbus itself has extended credit worth €587m to customers in the first half of 2016 – a tenfold increase on 2015 – to maintain sales.

Airbus notified investors of the potential issues in April, saying that the discovery of irregularities had emerged “in the context of its internal compliance improvement programme”. Offshoots and companies jointly owned by Airbus had come under investigation in the last two years in Germany, Greece and Turkey.

The Toulouse-headquartered aeroplane manufacturer’s global business sees contracts of staggering proportions, with its current order book valued at just under $1tn (£764bn) at the start of 2016. It claims in recent years to have edged US giant and great rival Boeing in the market for the biggest jets, although its flagship doubledecker superjumbo, the A380, has failed to find many new customers outside the Middle East.

While it has subsidiaries in the US, China, Japan, India and the Middle East, Airbus’s major aircraft design and manufacturing facilities are based in France, Germany, Spain and the UK, where wings are engineered.