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Public Enterprises to seek to oppose court applications against SAA business rescue

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Public Enterprises to seek to oppose court applications against SAA business rescue

22nd June 2020

By: Rebecca Campbell
Creamer Media Senior Deputy Editor

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The Department of Public Enterprises (DPE) has announced that it will approach the courts for permission to intervene in a court application against State-owned national flag carrier South African Airways (SAA) lodged by local private-sector airline SA Airlink (Airlink). The latter is applying to the court to interdict an SAA creditors’ meeting called by the flag carrier’s business rescue practitioners (BRPs) to allow the creditors to vote on a proposed business rescue plan for SAA. Airlink is also applying to the court to place the State-owned airline into provisional liquidation.

“The DPE has not been cited as a respondent in the SA Airlink application,” explained the department in its statement. “However, as shareholder representative, the DPE will approach the court seeking to intervene with the intention to oppose the application by SA Airlink. The DPE will also oppose SA Airlink’s application that SAA be placed under provisional liquidation. SA Airlink contends that there is no reasonable prospect of rescuing SAA.”

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The department further reported that it knew of plans by the National Union of Metalworkers of South Africa and the South African Cabin Crew Association to also go to court to seek to interdict the creditors’ meeting (scheduled by the BRPs for June 25). The DPE affirmed that it would also oppose the application by the unions.

“Government, as the sole shareholder of SAA, supports the business rescue plan where it results in a viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services,” said the department. “The DPE further supports the provisions of the Companies Act, which prescribes that the primary function of a business rescue process is to develop and implement a rescue plan with the view of fundamentally restructuring the business affairs and other liabilities of a company in distress, in a manner which maximises the likelihood for it to continue to exist on a solvent basis.”

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The DPE pointed out that the government had given the BRPs R5.5-billion to supplement SAA’s revenues, to consult with the flag carrier’s creditors, employees, management, board and other stakeholders and develop a detailed business rescue plan. The department, in its statement, expressed puzzlement and dismay at what Airlink and the unions were trying to achieve through their court applications.

“The government is committed to supporting a competitive, viable and sustainable national airline and wished to engage constructively towards the national interest objective of such an airline in a constrained fiscal environment, taking into account the impact of [the] Covid-19 pandemic on this situation,” assured the DPE.

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