SAA crash-lands but new airline will take off

The wings of SAA, the nearly century old state-owned airline, are about to be clipped, paving the runway for a new airline. 

This emerged from discussions on Tuesday between the public enterprises department, SAA’s business rescue practitioners Les Matuson and Siviwe Dongwana and unions. 

The decision follows the last-minute intervention by the public enterprise ministry last week, which saw the rescue practitioners agree that they would put an application to liquidate the airline on hold until  May 1. 

Before the intervention the rescue practitioners had given SAA’s 4 700-strong workforce a deadline of April 24 to choose between the termination of contracts, which would ensure severance packages would be paid, or the liquidation of the airline.

The airline is heavily in debt and the Covid-19 lockdown imposed in March saw the end of domestic and international travel, which resulted in SAA losing revenue. The rescue practitioners told unions last week that the airline cannot cover its expenses beyond the end of April. 

They said SAA would have to sell off some of its assets — which would take at least six to eight months — to be able to pay the severance packages. 

Details about the proposed new airline have not been revealed, but it is understood that an equity partner will be brought on board. 

The SAA’s wings sheared when the government refused to provide a R10-billion earlier this month. Public Enterprises Minister Pravin Gordhan said the immediate needs of curbing the coronavirus pandemic meant the government’s coffers are constrained and that no further funding would be extended for the airline’s business rescue process

Talks between unions and the rescue practitioners regarding the severages packages and the winding down of the airline are set to continue on Wednesday. 

In a letter sent by the National Transport Movement to its members on Tuesday, the union said it would not oppose the formation of the new airline but would negotiate that former SAA employees be absorbed by the new carrier.

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Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian

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