Government is concerned over the plan, saying it might have not been adequately accomplished
South African Airways’ (SAA) much-anticipated Business Rescue Plan (BRP), released on Tuesday, 16 June 2020, will see government raise more than R10 billion. As per the plan, the funds would be used towards severance packages for employees and paying back creditors which have helped the airline stay afloat.
The practitioners tasked with assessing whether SAA has any chance of surviving its major cash crunch, Les Matuson and Siviwe Dongwana, had until Monday, 15 June, to submit their final plan after the National Union of Metalworkers of SA (Numsa) and South African Cabin Crew Association (Sacca) had sought an extension.
Under the terms, only 1 000 jobs would be saved out of the 4 800 at the national carrier.
“If the Proposed Restructure is implemented in agreement with the Employees, the respective representatives and the Company it will be concluded by means of the Leadership Compact Forum or the section 189 process in terms of which SAA anticipates that 10 00 (one thousand) Employees will be retained and the remaining Employees retrenched and the terms and conditions of employment of the remaining employees will be revised along with the terms of the collective agreements”
SAA was placed under administration in December 2019 following years of financial problems and several government bailouts.
Government to assess the plan
The Department of Public Enterprises (DPE) said it would be evaluating the plan and its merits, also emphasizing that it supports a business rescue plan which would result in a viable, sustainable airline that provides integrated domestic, regional and international flight services. The DPE noted:
“Through government guarantees, the BRP’s have had significant additional financial resources at their disposal to enable them to restructure SAA by stemming the tide of wastage, an excessive cost-structure and cash burn. We will assess the plan which, we are concerned, might have not been adequately accomplished.”
The BRPs had more than R5 billion at their disposal to help augment the embattled airline’s revenue and develop a detailed plan which involved consulting with creditors and other relevant stakeholders.
“As the shareholder of SAA, government, taking into account the broader national interests, has made it clear that the desired outcome should be to establish a viable, sustainable national carrier that must emerge from the business rescue process. Particularly so as government if expected to marshal the resources necessary for this process from diverse sources”, the further department said.