South African Airways’ (SAA) creditors have voted to adopt the airline’s proposed business rescue plan which will see the formation of a new restructured national airline.
The Department of Public Enterprises welcomed the decision and said that it supports restructuring SAA into a commercially sustainable airline while minimising job losses. It added that the new airline will be geared to attract an equity partner.
“The priorities for the DPE are now to give effect to funding commitments by the government for the business rescue plan, and appoint a new reconfigured interim board for SAA.”
“The interim chief executive officer will be Mr Phillip Saunders, an experienced airline executive with a strong commercial background.” Saunders was previously the chief commercial officer at South African Airways.
The DPE said that it was also committed to providing voluntary severance packages to those impacted employees.
“The department hopes that a new SAA can reclaim market share while fighting to compete more in the emerging market space – notwithstanding the impact of the Covid-19 pandemic that will constrain the aviation industry for some time into the future.”
SAA entered into business rescue in December 2019 following years of mismanagement.
Since then, South Africa’s whole aviation industry has been plunged into crisis by the coronavirus pandemic.
Kulula-owner Comair has entered into voluntary liquidation while SA Express, part of the wider SAA group, has been placed in provisional liquidation due to its financial issues.
‘Grand financial heist’
Commenting on the vote, the DA said that the decision to vote in favour of the revised business rescue plan was a self-interested ‘grand financial heist’ to reap millions of rands in taxpayer’s money while saddling the fiscus with an expensive ‘dud’ disguised as a new airline.
“Despite their reckless lending to SAA over the past decade, with full knowledge that the airline was bankrupt and unable to service its debt, the creditors now stand to benefit off the back of South Africans without any accountability for their actions,” it said.
“It is a matter of considerable regret that those who obtained taxpayer-backed security for the credit/loans extended to SAA will now be paid the R 16.4 billion, all at the taxpayer’s expense.”
The party said that South Africa is now left grappling with the headache of how the “empty Treasury” will fund another billion-dollar bailout for the ‘new airline’.
“Public Enterprises Minister Pravin Gordhan’s reckless political posturing for a new airline does not alter the fact that South Africa is broke and does not have the fiscal space for any vanity project.
“The immorality of the decision made by SAA creditors today is that, hundreds of thousands of South Africans who have lost their jobs due to Covid-19, will now stand by and watch as another R16.6 billion is sunk into a black hole over the next three years, never to be recovered.”