We will ‘co-create’ a new national airline for South Africa: government

The Department of Public Enterprises (DPE) has called on creditors, unions and other stakeholders to vote in favour of a business rescue plan for SAA on Tuesday (14 July), as it believes that this is the only realistic pathway to the restructure the airline and for a new national carrier to emerge from the business rescue process.

“By approving the business rescue plan, creditors and employees will become the co-creators of a new national airline at a time when the devastating consequences of the Covid-19 are causing thousands of job losses in the global aviation industry,” the department said in a statement.

“This is the only realistic path through which creditors and employees will derive optimum benefit, either for outstanding debts due, or for severance packages that will become available to retrenched employees.

“It is also the preferred path from which a new viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services, can emerge.”

The DPE added that a positive vote to finalise the business rescue process would be the most expeditious option for the national carrier to restructure its affairs, its business, debts and other liabilities.

It further cautioned that there are several ‘disadvantages’ should the airline be liquidated. These include:

  • Creditors would receive substantially less for debts owed to them by SAA;
  • There would be a loss of opportunities to provide the new airline with technical, financial, and operational expertise;
  • Overall future business partnerships and the severance benefits to retrenched employees would be capped across the board, regardless of years of service.

Should SAA be liquidated, every employee, no matter the numbers of years spent at the airline, will receive only a capped severance settlement of R32,000 and lose all other benefits, it said.

“On the other hand, a restructuring process would offer severance and retirement packages based on years of service, the opportunity to re-employ skills for displaced employees in the future and opportunities to start their own businesses as service providers for a new airline.

“For the DPE, the finalisation of the business rescue plan and the emergence of the new airline would allow unions and other key stakeholders, who have deep knowledge of the sector, to help form a new airline as well as coming up with novel ways of addressing the interests of the displaced workers.”


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We will ‘co-create’ a new national airline for South Africa: government