The Public Enterprises Minister has welcomed the decision by the government to back the business rescue plan for, and the restructuring of, State-owned national flag carrier South African Airways (SAA). The government has committed itself to provide R10.5-billion to fulfil these objectives.
“The Ministry believes that the completion of the business rescue process is the only viable alternative to a viable and sustainable national carrier – one which supports job preservation and the ability to bring the airline back from the brink to a position where employees, suppliers, and business partners can continue to contribute to the South African economy and its integration into the global economy,” affirmed the Minister’s office in its statement. It argued that a failure to provide the funding would have led to the liquidation of the airline, which would have cost more than R18.5-billion.
This funding will allow the completion of the business rescue and restructuring processes for SAA. It will now be possible to appoint an interim board, an interim CEO and interim CFO and implement a training layoff scheme (‘social plan’) for employees being retrenched. It will also allow the settlement of the airline’s debt and the payment of voluntary severance packages to workers.
In addition, preparations for the relaunch of the airline as a “customer-centric … lean, technology capable, digitally modernised and agile” operator can now start. Further, it will now be possible to go forward with the selection of a “suitable” strategic equity partner to boost its relaunch.
“The Department of Public Enterprises is engaging constructively towards the national interest objective of the formation of a new airline in the first half of 2021, which will be run in a professional and sustainable manner to support key economic sectors – including tourism, and solidify South Africa as an African gateway to international markets,” the statement continued. “The Ministry believes that the restructuring contained in the business rescue plan for SAA is fundamental and will create a solid base for the emergence of a competitive, viable and sustainable national airline for the Republic of South Africa.”
The relaunch and management of the airline will both involve a partnership with the private sector. The ultimate result will be to relieve the fiscus of the financial burden that SAA has been to it.
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