SAA creditors give go-ahead on rescue plan

South African Airways’ creditors have approved the state airline’s business rescue plan, bringing to an end a long seven-month process.  

Business rescue practitioner Siviwe Dongwana told the meeting of creditors on Tuesday that 86% of them had voted in favour of the plan, which will see the airline dissolved to make way for a new airline. 

The Companies Act requires more than 75% of creditors to approve a business rescue plan; failing to get this go-ahead would have led to the airline being liquidated. 

Labour unions and staff representatives — with the exception of the SAA Pilots Association, which represents 600 members (13% of the total number of SAA employees) — have accepted the voluntary severance and retirement packages. The  2 700 people who will lose their jobs will get one week’s salary for every year worked plus a month’s pay. 

The packages will cost the state R2.2-billion. 


Another 1 000 SAA employees are expected to be retained for the new airline. They will be on a temporary/training lay-off scheme for 12 months.

Any former employee can be re-employed by the new airline that should emerge after the dissolution of SAA. 

The rescue plan achieves the recovery projections over the next three years. Trade creditors will be paid 7.5c for each rand they are owed, over the same period. 

The government has committed R10.4-billion to the rescue plan. This is in addition to the R1.4-billion it has already promised. Dongwana said the government’s letter of commitment is expected by July 15. 

The R10.4-billion is to be used for the payment of operations, severance packages, aircraft lease cancellations, paying off SAA’s debt after it was placed under business rescue in December and reimbursing SAA ticket holders for forward booked flights.

The acting director general of the department of public enterprises, Kgathatso Tlhakudi, denied that rescuing the airline was a “vanity project of the government”, saying the decision was in line with the government’s plans for improving the economy and “in the interests of all South Africans”. 

“The restructuring that is being proposed for SAA is fundamental and will create a solid  base for the emergence of a competitive, viable and sustainable national airline,” he told the creditors. 

Tlhakudi added that the new airline will be a national asset that is likely to attract private equity partners. A transactional adviser has been appointed by the government to “pair up” with the potential equity partners. 

The new airline’s board members will be announced soon. In the meantime, the current chief operations officer, Philip Saunders, will be the interim chief executive. Vuyani Jarana resigned in June last year, and acting chief executive Zuks Ramasia went on early retirement in April.

“The DPE [department of public enterprises] believes that the favourable vote is a much better outcome for creditors and SAA employees than liquidation, and the government remains confident that the implementation of the business rescue plan will balance the rights and interests of all parties,” it said in a statement. 

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

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

Related stories

SAA in talks to recoup R350-million in blocked funds from Zimbabwe

The cash-strapped national carrier is in the process of recouping its blocked funds from Zimbabwe, which could go towards financing the airline’s business rescue plan

Workers get their slice of SA Express

Proposals for how to carve up ownership of the airline could mean that the government will no longer hog the whole pie

SA Express employees in R250m crowdfunding bid to buy their airline

Amid the overnight, worldwide crash of the air travel industry, a group of retrenched SA Express employees have an ambitious plan to raise R250-million in seed funding to buy the cash-strapped airline.

SAA creditors get R9.3bn from government

The state-owned airline owes R16.4-billion to lenders and needs an additional R10.1-billion to fund the business rescue plan

SAA needs R2.2bn to pay for voluntary severance packages

More than 3 000 employees out of 5 000 have accepted the packages. The state-owned airline, which went into business rescue, is likely to retain 1 000 workers

Unions reject SAA severance pay

Labour representatives argue that the state airline just ‘expects 78% of workers to accept one week’s pay’ for each year worked
Advertising

Subscribers only

Toxic power struggle hits public works

With infighting and allegations of corruption and poor planning, the department’s top management looks like a scene from ‘Survivor’

Free State branches gun for Ace

Parts of the provincial ANC will target their former premier, Magashule, and the Free State PEC in a rolling mass action campaign

More top stories

Vitamin therapy is for drips

It may be marketed by influencers, but intravenous vitamin therapy is not necessary and probably not worth the hype, experts say

Facebook, Instagram indiscriminately flag #EndSars posts as fake news

Fact-checking is appropriate but the platforms’ scattershot approach has resulted in genuine information and messages about Nigerians’ protest against police brutality being silenced

Murder of anti-mining activist emboldens KZN community

Mam’Ntshangase was described as a fierce critic of mining and ambassador for land rights.

Unite with Nigeria’s ‘Speak Up’ generation protesting against police brutality

Photos of citizens draped in the bloodied flag have spread around the world in the month the country should be celebrating 60 years of independence
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday